Now this is what is TRULY SAD and its coming from one of the most respected financial experts in the world, not some rinky dink right wing website.
Paul Volcker Slams 'Broken' Financial System, Banks, Regulators
Paul Volcker pulled no punches Thursday in a speech at the Federal Reserve Bank of Chicago, criticizing nearly all aspects of the nation's financial system, which he said is "broken."
The former chairman of the Fed and current chairman of the president's Economic Recovery Advisory Board had harsh words for banks, regulators, business schools and the larger economy. According to the Wall Street Journal, Volcker improvised the remarks, having decided not to read his prepared speech. He called for "structural changes in markets and market regulation."
Investment banks, he said, according to the WSJ, have become "trading machines instead of investment banks [leading to] encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn't easily be managed by the old supervisory system."
The "Volcker Rule," which was billed as a key component of the recent Dodd-Frank financial reform act, was designed to limit banks' ability to use taxpayer-backed funds to make investments on their own behalf. But the final version of the rule, after being subjected to lobbying and compromise, was weaker than Volcker had intended. He told The New Yorker he was "a little pained that it doesn't have the purity I was searching for."
His critique Thursday didn't stop with investment banks, according to the WSJ. Central banks, he said, became "maybe a little too infatuated with their own skills and authority."
A problem with regulation, he said, is that it relies on human judgment. He also bemoaned regulators' lack of perceived authority, saying that a financier might tell a regulator, "We know more about banking and finance than you do, get out of my hair."
As Bloomberg reported, Volcker said the mortgage system is "absolutely broken," and is the most pressing problem in the current economic situation. "It's going to take a long time to repair the basic disequilibrium in the economy," he added.