The Wall Street Journal’s primer on The Volcker Rule

By Edward Harrison On Feb 2, 2010

Paul Volcker is testifying before the Senate Banking Committee today on financial regulatory reform. Recently, the Obama introduced reform proposals inspired by Volcker and now being dubbed The Volcker Rule.

The Wall Street Journal has done a good job over the past two weeks of outlining the internal politics, details and potential effects of the Volcker Rule for financial regulatory reform. So, in advance of Volcker’s testimony, below are two recent video clips of Paul Volcker outlining his this thinking on The Volcker Rule late last year, two clips of Debevoise & Plimpton’s Gregory Lyons comparing it to Basel proposals, and links to related articles from the Wall Street Journal.

Also see Volcker’s NYTimes Op-Ed: Paul Volcker – How to Reform Our Financial System – NYTimes.com

Future Of Finance Initiative, 2009: Volcker Q&A on financial innovation

Gregory Lyons, co-chair of the Americas Financial Institutions Group at Debevoise & Plimpton, compares the ‘Volcker rule’ and the Basel Committee’s proposals to reform bank capital, leverage and liquidity.

January 21: Obama Goes Long Volcker

“Mr. Volcker hasn’t been a main player in key decisions handling the global financial crisis,” wrote The Journal’s Monica Langley wrote flatly back in April. Indeed as recently as last week we had a story in The Journal with the headline: “Volcker Voices Views in a Vacuum.”
Now all of the sudden Volcker gets a “rule” to call his very own? In the world of politics, getting a “rule,” or better yet a “doctrine,” is not-quite having an airport named after you, but it ain’t far off.

So what’s changed?

For one thing, the stunning loss of the Ted Kennedy’s U.S. Senate seat to a Republican seems to have refocused the administration’s attention on demonstrating to the American public that it sees the economy as job one.

January 21: Volcker rules again with ‘Volcker’s rule’

At least for the day, the most powerful man in the U.S. financial industry and for equities markets is 82 years old, a man who ended his leadership of the Federal Reserve more than 20 years ago.
But Paul Volcker is back. Big time. Reportedly on the margins of the Obama administration even in his current role as an adviser, "the tall guy behind me," in the words Thursday of President Barack Obama, is back on stage figuratively and literally.

January 29: Volcker Vs. BofA: The HCA Case Study

The BofA-Merrill unit [Bank of America-Merrill Lynch Capital Partners] owns 25% of HCA’s common shares, along side independent private-equity firms KKR and Bain Capital, which each also own a quarter of the health-care company’s equity, according to a securities filing.
Merrill made the investment when HCA was taken private in a $33 billion leveraged buy out in 2006. Since then, HCA has reduced its debt load, boosted revenue and, as Deal Journal wrote about earlier, is paying a fat $1.75 billion cash fourth quarter dividend to its investors.

A BofA spokesman says its HCA investment includes money from outside investors as well as the bank’s own money.

White House officials have said the Volcker rule would likely allow commercial banks to make investments on behalf of clients, but not with the bank’s own money. Whether a Volcker rule would affect BofA’s HCA investment remains unclear.