Two Cheers for the New Volcker Rule

Back in the spring and summer of 2010, I spent a bit of time with Paul Volcker, the grand old man of American finance, who was busy pushing Congress and the Obama Administration to severely restrict the risky trading activities of banks that enjoy government guarantees in the form of deposit insurance and access to emergency-lending resources at the Federal Reserve. Sitting in his reassuringly modest office in Rockefeller Center, the walls lined with books, papers, and mementoes of his fishing trips, the six-foot-seven former chairman of the Fed explained his reasoning in characteristically succinct and direct fashion: “If you are going to be a commercial bank, with all the protections that implies, you shouldn’t be doing this stuff. If you are doing this stuff, you shouldn’t be a commercial bank.”

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