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The conference committee for financial reform legislation won’t start meeting until next week, but the Financial Times reports that one provision in the bill is already on target to get tightened up:

Congressional negotiators are moving to toughen financial reform legislation, raising the chances that banks will face a strict ban on proprietary trading and a new conflict of interest rule, people involved in the deliberations say….The provision, sponsored by Jeff Merkley and Carl Levin, two Democratic senators, would toughen the “Volcker rule”, which bans banks from trading for their own account or owning hedge funds and private equity firms, but gives regulators time to study the rule and modify it. “That is a very wishy-washy way to approach the issue,” Mr Merkley said.

Mr Levin said even though the Treasury would “probably…want as much power as they can get to…modify [the bill]”, he thought Congress should write a strong final version.

The Wall Street Journal reports that traders are genuinely unnerved:

Since political momentum began building earlier this year to limit trading for profit at Wall Street firms, traders have been exploring their options, and some have already left. Outside the banks, private investment funds looking for skilled traders have been gearing up for a hot talent market.

….”With Volcker, you’ve got everyone shaking in their boots, so these traders all have an ear to the ground,” says John Pierson, a Manhattan-based headhunter for financial firms.

I guess I can live with this. I’d rather have trading being done in hedge funds, where it belongs, than in banks, where it risks blowing up the plumbing of the financial system. One caveat, though: that trading income should be taxed as ordinary income, not capital gains, as it is now. Other people’s money, you know. The House has already done its part to change this, and now it’s the Senate’s turn.

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DONALD TRUMP & DEMOCRACY

Mother Jones was founded to do journalism differently. We stand for justice and democracy. We reject false equivalence. We go after stories others don’t. We’re a nonprofit newsroom, because the kind of truth-telling investigations we do doesn’t happen under corporate ownership.

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