"Paul Ryan Offers Strong Endorsement For New Financial Rule To Rein In Risky Trading"
In the past, Ryan held a more lukewarm position on the Volcker Rule, where he endorsed the concept in theory but not in name.
By banning federally insured banks from risky proprietary bets, the Volcker rule is a key component of Dodd-Frank Wall Street Reform Act and is meant to protect taxpayers from bank speculation. Ryan’s words put him at odds with conservatives in the House and Senate who have repeatedly worked to delay and weaken the bill. He cited Volcker at two different town halls, as well as Sens. Sherrod Brown (D-OH) and David Vitter’s (R-LA) bill to rein in big banks:
RYAN: I have concerns about the Vitter bill. The idea is one I find very appealing. I also believe in what we call the Volcker rule, which mean if you’re going to act like a hedge fund then be a hedge fun. If you’re going to be a bank, then you have to be regulated like a bank. Meaning separate the ability of banks to take the implied subsidy of insured deposits and leverage that. I think that was one of the mistakes that was made.
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Although he says he supports consumer protections in theory, Ryan is still lockstep with Republicans on demanding the repeal of Dodd-Frank.
House and Senate Republicans are responsible for repeatedly delaying the Volcker rule after their unsuccessful attempt to cut it from Dodd-Frank. For instance, Reps. Spencer Bachus (R-AL) and Jeb Hensarling (R-TX) have done their best to ensure it does not take effect anytime soon. “While the Volcker Rule promises little if any benefit, what little benefit it does promise will not be realized if regulators further fragment financial markets and ratchet up the costs of compliance for market participants by issuing multiple versions of the Volcker Rule,” Bachus and Hensarling wrote. Even now, the expected date of the final rule was moved from the beginning of 2013 to sometime this year.
While bank industry lobbying has not managed to eliminate the rule in its entirety, Republicans have successfully watered it down to the point where even Paul Volcker has said he doesn’t like it. But a strong Volcker Rule like the one originally proposed is still necessary, and it has garnered support from many former bankers and industry insiders. As one former Merrill Lynch banker said, the Volcker Rule is “necessary to correct a mistake that poses a danger to our economy.”