Volcker and Goolsbee

December 11th, 2013 at 10:43 am

A fair bit of interesting press today on the Volcker rule, most landing pretty squarely where I did yesterday: it’s pretty tough, and better-than-expected given the staunch opposition, in terms of distinguishing legit customer-oriented trades versus proprietary ones, and it has some potentially useful language that should dampen traders’ incentives to take excessive risks to boost their pay.  But it’s all about the enforcement.

Yet in all the articles I read–and I did not read every one–I didn’t see the (admittedly weird) name Austan Goolsbee, and I think I should have.

Back in the day when Austan and I were both on the President’s econ team (I was VP Biden’s chief economist), he worked very hard to ensure the Volcker rule (and Volcker himself) stayed in the policy mix.  He wasn’t alone, and I’m not suggesting there was a big move to block the rule.  If anything, the major concern was the feasibility of writing regs that could distinguish proprietary trades from “market making”–using bank capital to provide custom hedges for customers.

Anyway, Austan recognized that this distinction could be made, as did, of course, Volcker himself, and pressed to keep this part of Dodd/Frank financial reform in the mix.

Just a little reminder of a very important fact: policy outcomes depend inordinately on the people in the room.  Sure, theory, evidence, and of course, ideology matter a lot.  But personnel matters most.

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2 comments in reply to "Volcker and Goolsbee"

  1. Peter K. says:

    Hopefully Podesta will push Obama in the right direction.


  2. Perplexed says:

    -“Just a little reminder of a very important fact: policy outcomes depend inordinately on the people in the room. Sure, theory, evidence, and of course, ideology matter a lot. But personnel matters most.”

    This is precisely why it is so important that we prevent the corruption of our democracy. The reach of those preselected to run for office by “The Lesters” is a corruption that turns our democracy into DINO:

    http://www.ted.com/talks/lawrence_lessig_we_the_people_and_the_republic_we_must_reclaim.html

    Our entire “historical experiment” with self-governance is being put at serious risk by this corruption. Putting an end to it is not an option, its a necessity. The difficulty increases with time, not the other way around.

    Bill Moyer had Mark Leibovich (“This Town” author) on his show last Sunday – well worth watching – the ethical leaders are out there – we just have to find a way to get them past the filters of the “Lesters” The price of elections won’t change with 100% public financing and we can choose to tax whoever we want to foot the bill. We must first however, reclaim our republic and restore the power of “We the People” to do so.


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