Former Wall Street Insider Nomi Prins:
Volcker Rule Won't Help;|
We Need Glass-Steagall
Jan. 24, 2013 (EIRNS)Nomi Prins, journalist and author of several books, including the forthcoming All the President's Bankers, gave an "insider's" perspective to the ongoing financial crisis, in a wide-ranging interview with EIR's Jeffrey Steinberg, published in the magazine's Jan. 24, 2014 issue.
Prins was formerly a managing director at Goldman Sachs, a senior managing director at Bear Stearns in London, a strategist at Lehman Brothers, and an analyst at Chase Manhattan. She is currently a Senior Fellow at the Demos think-tank.
Asked whether the Volcker Rule, an 892-page insert to the Dodd-Frank Act, would do anything to make a new financial crisis less likely, she said it would not. In fact, the Volcker Rule is mostly composed of a list of exemptions to its very limited restriction on one particular kind of speculative banking.
The likelihood of another major banking crisis in the near term, she said, is great. The biggest banks are some 40% bigger than they were at the time of the 2007-08 crisis; the top six banks are responsible for 93-94% of the trading activities in the country, and account for 96-97% of all the derivative-related risk of all U.S. banks.
Prins emphasized that she has been a long-time supporter of a return to the FDR Glass-Steagall standard, and described the bills now before Congress calling for a return to Glass-Steagall as "very good bills. And it would be very important for the financial security of the citizens of this country and the nation itself, to ensure that they are passed." However, given the current situation in Washington, she considers the present likelihood of passage as slim. The "very top echelons of Washington" are aligned against it. "The will of Senator Warren, of all the supporters who know that it is necessary for stability in the system, is going to be fighting that battle," she urged.
The author discussed her new book in this context, demonstrating how the political will at the time of President Franklin D. Rooseveltincluding the outlook of some of the top bankerswas quite different from that which prevails today.