This WaPo editorial has a good, generally supportive discussion of the “Volcker rule,” a component of the financial reform law that disallows commercial banks, insured by the FDIC, from betting their own book on the market.
“The rule’s purpose…is to keep banks, whose deposits are federally insured, from taking excessive risks based on the funding advantage that they get from implied government support.”
In passing, the piece makes a point that I assure you will soon to become a talking point among the amnesiacs who want to gut financial reform. In applying the rule, “10,000 U.S. banks may eventually spend a combined 1.8 million hours a year [on compliance]…”
The thing is, the costs of implementing financial regulation need to be weighed against the costs of not doing so, i.e., the impact of the financial instability and recession caused (in part) by the absence of adequate controls on this type of speculation.
So when I read the part about 1.8 million hours, I wondered how many hours of work had been lost in the Great Recession. And the answer is:
16 billion hours.
So yes, the new rules of financial regulation will take some time to implement. But if they help to prevent the next meltdown, they’ll be well worth it.
(Source: BEA, NIPA table 6.9, difference in annual hours, 2007-09)