How the Volcker Rule Impacts the Financial Industry

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Dec. 12 (Bloomberg) -- On today's "The Agenda," Tom Keene, Scarlet Fu, Alix Steel and Ralph Schlosstein, CEO at Evercore Partners, look at trending news stories on Bloomberg Television's "Bloomberg Surveillance."

I'm looking at wall street.

Ralph schlosstein is with us.

First of all, ralph, i don't know anybody on the planet who likes the volcker rule except evercore partners.

Who benefits from the volcker rule?

You have the bigger firms and the boutique, smaller firms like you.

Are you the winner?

First of all, notwithstanding that, i have been outspoken about having a volcker rule that was benign, not really aggressive.

The reason -- you didn't get your wish.

The reason i took that position is i felt one of the great strengths of the american economy is our liquid capital markets, and i think the volcker rule, particularly as it was originally constructed, was an impediment to the liquidity of our markets, and therefore was actually anti-competitive for the u.s. will there be fewer jobs in the united states, or is it a distinction that a major firm, lazard or evercore, says that team of people, we love them in london?

First of all, we don't do any of these -- i understand.

First of all, it is probably going to add jobs in the financial services industry because you are going to have so many checkers and complaints people -- mr.

Dimon has confronted this already.

In the long run, it adds jobs.

The really hard thing about the volcker rule is that it literally requires traders and firms to make judgments about the motivations of each and every trade.

It is absolutely the wrong approach, from my point of view.

What we should be doing is regulating capital and risk, and we're doing that, but this is an added compliance requirement that is going to produce, in my view, very little benefit.

We have other agendas could i have got to wrap this up.

Let me ask the question i asked of the nobel laureate yesterday.

The careful what you wish for.

As you look at your wall street, what am i being careful and wishing for now?

This process -- fortunately, the regulators delayed the implementation, which will hopefully it was time to work out some of the bugs -- but this process inevitably means less liquidity, particularly in the bond markets.

That means higher spreads, and that means that investors, mom- and-pop and pension funds and insurance companies, are going to find it a little bit more expensive to trade and reposition their portfolios, and that is not a good thing for the u.s. financial markets or the u.s. economy.

We thank you for coming by today.

Greatly appreciate your perspective.

He said yankees on set.

Never invite him back.

Tom, you are going to head over to the radio to do -- david blanchflower with us on "bloomberg surveillance" in a bit.

We are going to move on with our agenda.

I am looking at global growth.

Goldman sachs saying the world economy is primed for its fastest expansion unit 4 years, with a view is leading the way, expanding 3.4% next year.

The you up -- europe is going to be better, china is going to be better.

Ralph, this speaks to your wheelhouse.

What is that mean for stocks?

The question is, i think, are the markets already anticipating that?

Stock markets tended to lead economic growth and profits.

I would say the market already reflects some anticipation of a pickup in growth.

I think there is a chance -- i would argue a significant chance -- that growth exceeds expectations and that could mean that the markets continue to do well.

I happen to be somewhat bullish on the equity market.

I don't think we will have another year like this year.

Which asset class are part of the world would benefit the most?

The u.s. equity market has had a very good run, this year and last year.

The laggards have been europe, to a certain extent, and this year the emerging markets.

If you look at them from an objective evaluation point of view, they are cheaper, particularly the emerging markets, then the u.s. economy, but obviously greater risk.

Some people say the financials are cheaper it for my agenda, i am looking at jpmorgan.

"the new york times" says it may pay almost two billion dollars for claims tied to madoff.

Five years ago ernie madoff -- bernie madoff was arrested for his ponzi scheme.

This has not been announced yet, but it will be announced most likely, according to "the new york times," in a couple of days.

Ralph, this marks another piece of litigation that is plaguing the banks.

Are we going to get another year of litigation for the banks in 2014? i think what we're seeing -- we have seen this before -- are these white large arid i'm -- quite large paradigm shifts in what is acceptable and unacceptable.

If you go back to research in the early part of this century, research was used by investment banks to count companies to get investment banking deals.

And then we put in place some very appropriate separations between research and banking.

For a long time there was a big boy rule.

If you were dealing with sophisticated people, you didn't have to look at what you were selling them.

This is changing.

It is a good thing.

By the way, we should mention that jamie dimon will be speaking later today as well here it "bloomberg surveillance"

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change