Ex-Fed chief Paul Volcker's 'telling' words on derivatives industry

[AtW]

NYSE only got stricter after Enron

Enron was in 2001, right now it is end of 2009: whole decade gone since they got much stricter.

Yes I am sure good fellows from NYSE are not very happy about "their business" going to the City, but that's not their decision - unlike UK in the USA there is Govt that actually pursues criminals, they do it because they actually make things in USA that they can sell, rather than relying on trading football clubs in hope of some rich foreinger bringing money into this country.

[snaw]

One of the Russian "oligarchs" that can freely travel to UK and Europe wasn't able to get visa to USA for many years, even now I think due to alleged links to mafia (in the industry that he controls a lot of owners were shot dead in 90s, somehow he survived).

The matter of fact is that USA actually tries to get such criminals and NYSE regulations were stricter than LSE, which is why all those dodgy IPOs happened here. I am sure the City called it "competitiveness"

Well, I can't argue about our visa system being laxer than the US, but apart from that I reckon you're talking out of yur arse, as usual. NYSE only got stricter after Enron, and they've been screaming out ever since to stop being so strict cause they're losing business, and prominence because of it.

[AtW]

That's right, they don't have organised crime, or corruption in the USA ...

One of the Russian "oligarchs" that can freely travel to UK and Europe wasn't able to get visa to USA for many years, even now I think due to alleged links to mafia (in the industry that he controls a lot of owners were shot dead in 90s, somehow he survived).

The matter of fact is that USA actually tries to get such criminals and NYSE regulations were stricter than LSE, which is why all those dodgy IPOs happened here. I am sure the City called it "competitiveness"

[Scary]

some of their owners can't even get visa to USA because of alleged suspected links to mafia.

And yet Wall Street is pretty much run by the Mafia (or at least has many big players connected to the Mafia).

[snaw]

I don't hear much about criminals from Eastern Europe buying football clubs in USA, yet it happens in this country and nobody asks questions where the money to buy club came from.

That's right, they don't have organised crime, or corruption in the USA ...

[AtW]

These regulations are so onerous that it is making companies seriously think twice about listing in the USA.

I don't hear much about criminals from Eastern Europe buying football clubs in USA, yet it happens in this country and nobody asks questions where the money to buy club came from.

Those dodgy companies from Eastern Europe that did IPOs on LSE did so because of light regulation here - some of their owners can't even get visa to USA because of alleged suspected links to mafia.

[snaw]

AtW banging on about his views on finance & economics is like getting lectured on modern science by the Spanish Inquistition.

Yes, the whole derivatives industry, is encapsulated in your and volckers comments on credit default swaps and collateralised debt obligations is meaningful.

[Gonzo]

UK regulatory regime was much weaker than in the USA. That's why a lot of recent IPOs happened on LSE rather than on NYSE: nobody asked questions here.

That is down to a completely separate set of regulations.

The Sarbanes-Oxley act of 2002 was introduced as a response to the corporate fiction that was uncovered with the collapes of Enron and Worldcom (and others).

These regulations are so onerous that it is making companies seriously think twice about listing in the USA.

But these have nothing to do with the ability that the banks had to gamble their entire capital.

[AtW]

I'm always keen to hear SKA news

There are some real BIG ones in the works just now, stay tuned, they are imminent now...

[NickFitz]

Your ideas are intriguing to me and I wish to subscribe to your newsletter

Not you AtW - Mr Volcker. I'm always keen to hear SKA news, but in this case you have to give centre stage to the man who told those useless greedy ****ers that they aren't as ******* wonderful as they like to think they are

[AtW]

In the same way that I have no time for the people responsible for the regulatory failure in the UK, in the USA Investment Banks and Commercial Banks were legally kept separate between 1933 and 1999.

UK regulatory regime was much weaker than in the USA. That's why a lot of recent IPOs happened on LSE rather than on NYSE: nobody asked questions here.

[Gonzo]

In the same way that I have no time for the people responsible for the regulatory failure in the UK, in the USA Investment Banks and Commercial Banks were legally kept separate between 1933 and 1999.

If things had stayed that way the world would not be in the tulipe it is now.

[AtW]

The former US Federal Reserve chairman told an audience that included some of the world's most senior financiers that their industry's "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful". (AtW's comment: I agree...)

Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk." (AtW's comment: aye...)

He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and "proprietary trading should be pushed out of investment banks and to hedge funds where they belong".

Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be "regulated on one side and protected on the other". He said riskier financial activities should be limited to hedge funds to whom society could say: "If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected." (AtW's comment: also people responsible for failure should end up in jail with life sentences to act as a warning to future generations of greedy bankers)