Volcker to Regulators: “Finish the Job”

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Paul A. Volcker delivers the William Taylor Memorial Lecture hosted by the Group of Thirty

Volcker summed up the evening: “…the reform effort is incomplete. It needs fresh impetus. I challenge governments and central banks to take up the unfinished agenda.”

In a major speech tonight, Paul Volcker challenged the Administration, congress and the regulatory agencies to complete the unfinished business of regulatory reform of Wall Street. The former Chairman of the Federal Reserve, in a strongly worded speech at the annual William Taylor Memorial Lecture hosted by the Group of Thirty, outlined the remaining reforms necessary to complete the structural changes to our financial system. Volcker specifically directed “governments and central banks” to:

  •     Move to adopt International Accounting Standards, which is currently under review at the SEC. Require the rotation of auditors to facilitate true auditor independence.
  •     Increase competition among Credit Rating Agencies, and emphasize reliance on in-house credit analysis by investors.
  •     Regulate Money Market Funds that choose to offer bank like services and redemption of investments at par. MMF’s required a massive taxpayer supported bailout during the crisis, and after a few short years have entangled themselves in the financing pressures on European banks. Reform has been stalled at the SEC.
  •     Finalize policies to end “Too Big To fail”:
  •     Follow through on a meaningful Volcker Rule.
  •     Insure a strong, clear resolution authority is in place for non-banks.
  •     Engage international financial centers to establish consistent resolution policies.
  •     Commit to an orderly wind down of Fannie and Freddie, replacing the government’s role in residential mortgages with that of private financial institutions.

Volcker summed up the evening: “…the reform effort is incomplete. It needs fresh impetus. I challenge governments and central banks to take up the unfinished agenda.”

The William Taylor Lecture series is an annual event and the speeches are co-hosted and published by the Group of Thirty. Remarks delivered by the speakers do not reflect the position of the Group of Thirty.

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Stuart Mackintosh
Group of Thirty
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