Here is a great article which provides insight into the new rules on banking:  “At its heart, Volcker’s plan restricts banks from making speculative investments that do not benefit their customers. He has argued that such speculative activity played a key role in the financial crisis. The administration also wants to limit the ability of the largest banks to use borrowed money to fund expansion plans.”

Perhaps more interesting is the shift in reliance from Treasury Secretary Geithner (who along with current Fed Chair Bernanke, has engineered most of the administration’s response to the current financial crisis by growly increasing the money supply) to ex Federal Reserve Chairman Volker (who was known to have worked to increase the value of the dollar by raising interest rates in the late 1970’s): “Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama’s right as the president endorsed his proposal and branded it the “Volcker Rule.” Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.

The moment was the product of Volcker’s persistence and a desire by the White House to impose sharper checks on the financial industry than Geithner had been advocating, according to some government sources and political analysts. It was Obama’s most visible break yet from the reform philosophy that Geithner and his allies had been promoting earlier.”

Here is a link (free sign in required): http://www.washingtonpost.com/wp-dyn/content/article/2010/01/21/AR2010012104935.html?hpid=topnews

 Michael