"big banks are winning on volcker." "lawmakers pushing for weaker volcker rule reap wall street cash." "banks act to skirt volcker rule on high-risk trades." according to bloomberg news, the financial industry's success "demonstrates that four years after wall street helped cause the worst economic downturn since the great depression and prompted a $700 billion taxpayer bailout, its lobby is regaining its power to blunt or deflect efforts to rein in the banks." those are discouraging words. so to find out more about what's going on, i thought, why not go right to the source, the man after whom the volcker rule was named. educated at princeton, harvard and the london school of economics, paul volcker has been a formidable figure in government for more than 30 years, serving two terms as chairman of the federal reserve from 1979 to 1987. he's also advised the u.n and the world bank, he headed president obama's economic recovery advisory board. paul volcker, welcome to the show. >> thank you. >> these headlines and many ot

volcker knew the medicine had to be painful to work. there were demonstrations every day in front of the fed building in washington by groups ranging from home builders to car dealers. volcker received car keys in the mail symbolizing vehicles not sold as the company sputtered -- country sputtered. gross domestic product fell almost 8% in one quarter yet the remedy worked. by 1986 inflation fell to the lowest level in two decades. so in october of 1979 the citing of this story, inflation was 12.1%. when i was married in september of 1986 it was 1.5%. as a canadian theologian who thinks of the finest character quality as being what he calls a long devotion in one direction, so we're in our sixth decade of paul's teaching and public service. remember 1962? some of you remember 1962. gary powers is released by the soviet union. johnny carson takes over "the tonight show." the pope ex-communicates fidel castro. that's 1962. he paul volcker starts his national service at the treasury department. in '63, deputy undersecretary of treasury in t

victim of extortion jeffrey tucker will make this case and more than twenty senators advocating the volcker rule sent a letter to write elaters this week urging them to get the role done by this summer as they were supposed to despite fears were thwarted industry opposition also trying to lobby against the big banks desires members of occupy the s.t.c. we caught up with them for an update and beware the dangers of lawnmowers. thanks. i'll tell you what the federal government has done to crack down on this dangerous machine and let's just say when it comes to regulations the grass is always greener on the other side let's get to today's capitol like out. i love it everyone's laughing at the lawn more but this is serious stuff ok on this show we spend a great deal of time condemning central banks and governments for their manipulation of the markets we review the too big to fail banks for their outwardly criminal behavior and anti-competitive practices and we hate their executives for condoning as much we appreciate true capitalism and we make no apologies for it but what about regulations th

a really good thing when you get to introduce paul volcker at a podium. here's paul volcker and steve clemons who is my colleague at atlantic media. >> thank you, david.

the exception was the volcker years. volcker knew he couldn't end inflation in a month.so he had a longer-term policy. it will disappeared after he left. you know, it's all about what are we going to do this quarter and how will it affect next quarter. well, that's not the way to stability. in fact, it's a way to disaster. >> i mean, i've written so many columns over the course of my career in favor of central bank independence, which i think is goes to the heart of what you're talking about here, but i have to say that the, you know, the crisis has rattled my confidence, and the correctness of that view, the correctness of the central bank independence precisely because central banks have to accept the political constraints that confront them. don't they? i mean, they can't wish them away. so what i want to ask you is, let's suppose you've been running the fed which is not such al outlandish supposition. >> what a terrible idea. >> let's suppose that you were doing that job. and you confronted the problems that confronted bernanke in '08. what would you have done? >> we

slowly in recovery, we cannot put the financial services sector at a disadvantage, and i believe the volcker rule will do exactly that. so i'm hoping the administration looks at that and says if impositions of requirements on financial services sectors in the united states are not being looked at in the same way as europe and our companies are at a disadvantage, then something wrong is occurring, and i hope you'll look at that in a proactive way and try to help american companies, and i see my time has expired. i yield back. >> the chair recognizes the tez ig knee of the ranking my noertd member of the subcommittee. mr. carney is recognized for three minutes. >> thank you, mr. chairman. i'm down here, mr. secretary. thanks for coming today. i'm eager to hear your perspective on the situation in europe and in particular the threats that that situation poses for the recovery here in the u.s. i have really two main questions. first is can greece be put on a sustainable path forward? greece has had austerity measures imposed on to it to address its current crisis, and currently its current fisca

fail and, yes, the volcker rule as well. but i want to emphasize something different today. not the problems of the financial system but the imbalances in the real economy and what to do about them. the simple fact is the united states is a high consumption economy. that's been true for years and it's been true recently even when income has lagged. for a decade or more consumption has run through a willingness to save. consumers took on a heavy load of debt in the process, mainly in home mortgages. to some extent that process was propelled by the absence of real income growth for most households extending over a decade or more. you know, that's something that simply is not supposed to happen in a healthy, growing economy. productivity gains are supposed to be widely shared but instead we've had concentration of income growth at the very top of the population. 1% or less. with an income distribution that has not been seen so top heavy since 1929, which is a kind of interesting point of comparison. something similar went on with the federal budget. we reduced tax rates and inc

we do have exemptive authority under the volcker rule but the standard is high. we can xavrpt, provide further exemptions where it would promote the stability of the u.s. financial system and the safety and soundness of the banking system. so that said, we are looking very carefully at whether there's the possibility for us to provide further exemption here, and as i said, we followed clearly the statute other language, but we understand the intent may have been to be more permissive than that. >> okay. and your agency's been vocal about the need for additional regulatory reform to money market funds. only two years when you have had many changes to the money market fund regulation by enhancing the quality of underlining assets, shortening waiting maturity and for the follow yo increasing transparency for each fund. these were substantial changes that made the fund stronger and more able to withstand redemption pressure. have you done any analysis to show that those changes, to see if they've been effective? >> congressman, i recognize that this is a very controv

volcker rules.osing my advantage, look at what this bank is do. they copy it and risk builds up in a dangerous a fashion. i don't understand if we don't back to the days of the glass siegal rule which we could go back to section 20 where they were required to be in separate companies. i think the world would be a safer place. >> i agree with you. anybody--not anybody, i can't generalize that far but a lot of people who have looked at this and you wrote a spectacular book about it, a lot of people agree that the exponential increase in risk that left us as taxpayers holding the bag at the end of the day took us over the precipice. you're saying that dodd frank has not done a lot of so far. >> i think there are ways around it, and on top of that the volcker rule will not be enacted for two-plus years. between now and then there will be a continueed ferocious lobby push. but the bigger issue let's make a decision. if we want a different banking system let's have a different banking system. one that doe

and at the heart of dodd-frank is the volcker rule. there are many parts of dodd-frank but the real stick her have the volcker rule and i had breakfast with paul volcker and my understanding coming away from that many, many months ago was what he was trying to do was ensure that individual's deposits wouldn't be soaked up and used by institutions for trading. fair enough, they shouldn't be. >> rose: and if you were a depository institution they didn't want you taking that kind of proprietary risk. >> and they shouldn't be. >> rose: so reading the volcker rule like that, you approve. >> absolutely! snft we shut down our proprietary businesses before volcker started coming into effect. before the volcker rule got... >> rose: but after the crash. after the crash because we learned ourselves. so i always felt a much more elegant solution to the volcker rule was not to try and legislate what you can and can't do. so we'll make it so punitive nobody will want to do it because your shareholders won't let you. so let a market mechanism drive i

. >> i'd like to go back to the, to the proposed 298-page volcker rule. it's my understanding that the sec and other agencies received more than 17,000 public comments, that was already spoken about a little while ago. commissioner gallagher from the sec said in a speech yesterday and i'm going to quote him, that even a quick review of the many substantial comment letters the commission received revealed widespread fears regarding the fact of the proposed rule on the proper functioning of global markets and the competitiveness of the u.s. financial industry. goes on to say these fears, these are fears that i share. so with so many concerns surrounding the proposed rule and so much at stake, wouldn't you agree it would be a good idea to take a step back and pretty much go back to the drawing board and start all over again? we're dealing with a very substantial rule here obviously? >> congressman, we did get 15,000 or 17,000 comment letters which is a lot, but i will say what's actually more striking to me on volcker is the length and depth and quality of t

banks will now have more than two years to comply with the volcker rule the federal reserve and other regulators announce this pushes the date back significantly from what was supposed to be the deadline of july this year and it means banks will have to warriors to push for changes to regulations that are supposed to stop the kind of excessive risk taking with federally insured money that helped lead to the financial crisis in the first place and speaking of lobbying for regulations so they work for you remember john corazon m.f. global reportedly did just that helped to allow him to make big huge bets on europe that brought the firm down and took more than a billion bucks of customer money with it well next week the case heads to the hill again as new emails have been produced has more information come out that helps build a criminal fraud case and what does it show us about the bigger picture and going after possible crimes committed during the financial crisis that we've seen so little underspent for and as the international monetary fund has its three meetings are going on right h

we have the volcker rule, if you then add a transaction tax on top of the volcker rule, you'll first diminish liquidity and offset to a significant extent the act we just passed, making it easier for a company to public because you need liquidity markets to sell stock market and you're not going to have companies form and grow at the rate you want unless they know they can get out and sell their stock in liquid markets. >> that's a profound oupoint. i just want to add that i thought the work that you and carl shram did showing that extra 1% growth and the difference between 3% and 4% growth compounded over generations is huge. so start with that. but it really is dependent on the number of firms that can get to $1 billion in revenue over a 20-year period. so it's not facebook-type growth. it's companies that steadily grow. they do something else. they don't just add incremental jobs but they challenge the incumbent industries to get fitter and better. otherwise they run to washington and ask for protection. brian, on the transaction tax, financial stability, i know you have some opin

i drink tonight to him and to all of us. [ applause ] >> i'm kurt volcker.n vietnam i was a cbs camera man. if burt quint thinks i'm going to talk about tv correspondents now, i won't. i want to talk about the little people. i think, if you would ask any cameraman in vietnam who was the most important person he had, he would say it was my vietnamese sound man. and i was very lucky, i had a young guy, his friends, not i, called him boom boom ri. i know he was not an explosive expert. he was strong and he was careful. he was protective. and he saved my lives many times over. the only problem is he spoke as much english as i spoke vietnamese. i have to say one time we went to -- it was '68. we went to a place called fu bai that was a good place compared to dungaha and it was a good place compared to others. we were caught in a rocket barrage and you have to remember that a sound man is really the prisoner of a cameraman. because we were connected by an umbilical cord. and whatever i had to do, he had to do it whether he liked it or not, and in this case, i jump

global case it's important to look at as we see that the volcker rule has been delayed and the time that banks need to implement it for two more years so right there we will have more with mark leno author and host of the uncorrelated investing show. and still ahead a loose change dedicated to me a loose change dedicated viewer feedback i'll share my responses to your comments from this week but first your closing market numbers. if we just put a picture of me when i was like nine years old i like to tell the truth. i confess and i am a total get a friend that i love driving because he is a planned trip. he was kind of the jester. i'm very proud of the world without you has played. the game. you know sometimes you see a story and it seems so bleak you think you understand it and then a glimpse something else you hear sees some other part of it and realize that everything is ok if you don't know i'm charged welcomes a big picture of. what drives the world the fear mongering used by politicians who makes decisions and to didn't break through it if it made who can you trust no one who is yo

group submitted a 325-page volcker rouletter. you're actually seen people -- and that was done by a very small group of people, four or five people. you're actually having citizens groups making input in the rag regulatory process and the media has taken over, "the financial times" and other outlets have taken that up quite seriously. you're getting push back from unexpected areas. the second as i hate to say it is if we had, you know, we've obviously very aggressive efforts by the obama administration, the fed, to keep the banking system healthy. if we see more problems, you know, for example, if -- for example, a major european bank were to fail, i can't not see the problems not ricocheting over here and there would be a human cry for, why didn't we fix this? we thought we fixed it. >> next question. madam? >> i'm mitsy wortheim with the naval postgraduate school. i want to build on that. seems like one of the problems we have is nobody understands how this system works and where do we find a collection like you that can sort o

global case it's important to look at as we see that the volcker rule has been delayed and the time that banks need to implement it for two more years so right there we will have more with mark and author and host of the uncorrelated investing show. and still ahead a loose change dedicated to me a loose change dedicated viewer feedback i'll share my responses to your comments from this week but first your closing market numbers. there's a currency crisis. cars. trucks are going to graciously. who will be left standing with. the french election parties. before the break i had to stop markel in our gas mid-sentence as he was telling us all of the things that fly against the face of the conventional wisdom perpetrated in the mainstream media about the m.f. global bankruptcy i believe the eighth largest in this country's history taking an unprecedented more than one billion dollars in customer cash that's supposed to be sucker disaggregated cash that has not been returned nobody's in handcuffs we don't know the state of an investigation but here filling us in on how those last final days wer

on the road again two more years right so banks thought that they may have to comply with the volcker rule by this july which was originally the date regulators have come out this week and said no no no you have two more years july of two thousand and fourteen is when you'll have to comply which to me watching on the sidelines as we've been seeing banks the lobbying the regulations lobbying this rule that could have been thirty pages in is turned into hundreds of pages of what critics say are loopholes that allow banks to get around it what this two years says to me is this is two more years for banks to either lobby regulations so they look more like the way they want them to get around or to restructure their businesses so that they can still engage in this proprietary trading in a different department with a different name structure differently is so delicious looking like you are sound like proprietary gadabout about letting them have this two more years question i think it's having to do with compliance and the concerns surrounding compliance i mean i really don't know i mean the

and doctor volcker, you confirm that. there's a need for change but there's also a need for the big picture. now there is one big hole in the economic paradigm. it's reflected in our -- >> i'm going to ask you to frame it in a question. we just don't have time for statements. so make it a question. >> the question is why in the existing economic paradigms of all schools of economic thought do they only focus on labor and there is a potential additional way of achieving shared prosperity? that is changing the tax system, changing the federal reserve policies? changing -- adding back glass stiegel so there is more regulation, separation of powers within the financial industry so that capital credit is different than consumer credit. there's all these things fit in to a way in which you can expand capital ownership as we have done under the laws for employees. why can't we do this universally for every man, woman and child in america? >> thank you, norm. >> i don't know how to answer that question. one of the things that you

we had the volcker rule, for example, which is going to diminish liquidity and we had a lot of people worried about that. if you then add a transactions tax on top of the volcker rule, you're going to also further deminnish liquidity and off set to a significant extent, the act we just passed because you need liquid markets in order to be able to sell stock and you're not going to have new companies grow at the rapid rate that you want unless people know especially the venture capitalists and angel investors. >> that's a profound point. i want to get brian's thoughts on that and then more broadly. i thought the work you and carl did showing that extra 1% growth and extra growth compounded over generations is huge. the number of firms that can get to a billion dollars in revenue over a 20-year period. it's not facebook type growth. it's companies that steadily grow because they do something else. they don't just add incremental jobs, but challenge the incumbent industries to get fitter and better and that's the only way we know they will get fitter and better. otherwise, they run to wa

was supporting volcker as it's currently written.ands that there are significant risks to liquidity in some of these fixed income markets and as a result, they need to significantly adjust some of that market making regulation that would have put a serious damper on some of these markets. and so i think we're going to see a meaningful rewrite. the expectations that we had heard is that it might be even the end of the year by the time we see the next version. but everyone you talk to, no one was supporting volcker in its current form. >> okay. and of course maybe better take they take a little extra time on it and get the reform to be the right way. of course than sort of try to speed up and push something lieu that's not right. brennan, great to have you with us. he's the director of quit i research at ubs. >> so treasury secretary tim geithner says the u.s. economy is stronger and better shape to weather challenges like high gas price, although europe's gas prices is still a worry. geithner dismisses suggestions the u.s. deficit put

miller was talking about the volcker rule. and i know that there have been associations like sipma that have commented, their comment letter dated february 13, 2012, and regarding how the volcker rule proposal is prohibiting proprietary training presumption and saying it's inconsistent with intent to allow useful principle activity. >> again, there has been a lot of concerns exappreciationed about the initial proposed rule. when the law was passed, congress required the treasury department to gut guidance out to rule writers in how the rule should be designed t the rg should be designed. that was met by really quite a lot of support on all sides of the political spectrum. but when the rule came out as drafted by those four regulators, as you've seen there's been a broad set of concern, both sides, too tight, too loose, too weak, too complex. and you know, it is the strength of our system that the way this and the congress is designed we are required to put these out for public comment. you get to learn from these rules. i in m

inflation came down over time, the fed was successful with volcker and then greenspan taking the helm after him in bringing down the inflation and engineering the great moderation, lasted for 25 years. a period during which inflation not only came down but risk generally came down as well. and at this time we also had a bull run in the housing market. we had policies put in place to encourage home ownership and there was affirm belief that home prices would never drop. they had never dropped at least over the period of history for which we had good data, and this was a factor that fed very much into both the financial engineering that you are talking about, and i think fed some complacency at the fed, i'm not going to disagree with paul on the regulatory breakdown. there was a philosophy at the fed, at the top, that said that markets do a better job of policing themselves than government regulators, and unfortunately that was a major factor, i think -- was one of the contributing factors. i'll say that certainly the success of the fed taking risk out of the system, bringing inflation

known as the london whale so does this mellow prop trading and does it make the case for a strong volcker rule in full effect we'll talk about it and u.s. stocks fell today after the s. and p. closed out its worst week of two thousand and twelve last week now media reports are saying it's the reaction to a bad jobs report will back up we'll look at the big unemployment picture we'll speak to karl denninger of the market ticker and speaking of economic problems. there are only a few things to get the real the u.s. economic recovery that finally seems to be underway and one of the news the debt crisis in europe. really that's just one of the things one of only of you those who are us politicians looking for a scapegoat or an excuse oh and the greeks are just the lazy freeloaders who caused the eurozone debt crisis right we have a reality check for the mainstream media let's get to today's capital account. so u.s. stocks fell today and people are crediting friday's lousy u.s. jobs report for that now it is hard to say exactly what moves markets you can't really attribute it to one thing or a

regulators issuing a statement on the volcker rule. keep in mind the statutory effective date for this rule yet to be written is july 21, 2012. regulators issuing a statement saying the banks that will have to comply with volcker have two years to conform to the yet to be written rule. so they have to be in compliance with it by july 21st of 2014. as i said, the rule has yet to be written. so there remains a legal black hole for the banks to fill at this time. nonbanks systemically they have two years from the date they are actually named as nonbanks. you might recall earlier this month regulators met to declare what a nonbank sifi might be. again, during this time this two-year conformance period, regulators say banks are expected to engage in good faith conformance activities on volcker which i will say yet again we don't have yet. they keep waiting for it. one thing to note, brian, the fed has the option to extend this conformance period. >> mary, i will see you two years exactly from the date of yet some undetermined day. >> okay.

recently post financial crisis seems to really have been dogged frank regulation and more recently the volcker rule portion of it which we've been talking a lot about now we see the facts and figures but how exactly do special interests influence washington how does it work well we're lucky because today we have an insider here to tell us our guest was the republican super lobbyist kevin spacey played him in the movie version because you know jack we played a bit of he was convicted on charges of fraud corruption and conspiracy related to his illegal lobbying efforts back in two thousand and six he did the time he was released in two thousand and ten and has been speaking out against lobbying since then we're going to reform the system jack avram office here he's former lobbyist as i said also author of kept. punishment the hard truth about washington corruption from america's most notorious lobbyist so thank you so much for being on the show purpose for having me and i think our viewers are going to be really excited to hear how this all really works from someone who's experienced first hand

to be trying to and at the big banks that seem to fail banks doesn't seem to be working with the volcker rule now we hear this my question is what does this tell you about the rest that banks are still taking in the due diligence being done you know one of the one of the things that's out there in the world is that some of the bankers because they are in the most money happen to be the smartest people on the planet and i hope two thousand and eight. disabused the so that notion and clearly when we saw these banks acquiring some of these a mortgage lender and mortgage insurers right at the peak tells us everything we need to know about about their ecumenist certain points and and listen you know this story about what she'd be morgan is up to is just should be interpreted as more of the same they're getting back in they're probably getting in very deep i've read the details such as they are about what the london whale has acquired it's a very very big position it could turn against j.p. morgan in a startling passion they've taken a bet they claim it's hedged but of course that was the same