Three years ago we were standing in the aftermath of the greatest financial implosion since 1929. High stakes gambling and risky bets gone bad on Wall Street had left our financial system near collapse and our economy in shambles.  This crisis had many causes—all man-made.

The Volcker Rule, as embodied in Merkley-Levin provisions of the Dodd-Frank Act, is a critical part of the effort to put in place financial rules of the road that will prevent another crisis like the one we experienced in 2008.

Put simply, the Volcker Rule takes deposit-taking, loan-making banks out of the hedge fund business. While hedge funds have their place in capital allocation, that place is not in commercial loan-making banks subsidized by FDIC insurance and the Fed discount window.  The reason is simple:  our banking system and our economy do better if the periodic bad bets of hedge funds blow up only the hedge funds and not our lending system that fuels economic growth and job creation.

(more…)