The Return of the Mack

Wow! What a great Thursday! It started with me shorting China in my personal account and making some dough. It’s not often that you can make money, feel like a patriot and know that your grandfather is smiling down on you from heaven.

And then Barack Obama got on TV and showed everyone he could be the craziest motherfucker in the room! In a stunning announcement, Obama stated that his wishy-washy attempts at financial reform are now officially going medieval. Good-bye advisers like ex-Wall Street crook Larry Summers. Hello Paul Volker!

This is your father’s father’s banker. The son of stern Protestants, Volker clocks in at 6’7 and is 82 years old. He is of an era when banks were actually in the business of lending money to real businesses. And he has tons of old school street cred. Volker hung with the Rockefellers, whipped inflation in the 70s, and called bullshit on the entire era of financial deregulation that began with Reagan. Now he has apparently won a power struggle with the compromised midget ex-banker crowd that had been advising Obama, like Robert Rubin, Summers, etc.

This is stunning news! Obama basically blew up Goldman Sachs’ business model. And the market freaked OUT. Down down over 200 points.

It is as if Obama went ballistic after Massachusetts. “You want populism? Fine! I’m burning down the prop desk at Goldman and every other investment bank! Let's see how Republicans try to position themselves now,” Obama seemed to say.

Below is an article from the WSJ regarding the return of Paul Volker. The Mack is back! And I love it.

At least for the day, the most powerful man in the U.S. financial industry and for equities markets is 82 years old, a man who ended his leadership of the Federal Reserve more than 20 years ago.

But Paul Volcker is back. Big time. Reportedly on the margins of the Obama administration even in his current role as an adviser, “the tall guy behind me,” in the words Thursday of President Barack Obama, is back on stage figuratively and literally.

As the president announced two major initiatives that would radically change the world of America’s big banks, he was flanked by Treasury Secretary Timothy Geithner and adviser Larry Summers. He also had with him two key Congressional leaders, Rep. Barney Frank (D., Mass.) and Sen. Christopher Dodd (D., Conn.).

But importantly, the president had Mr. Volcker, and he had another regulatory veteran who’s been a straight shooter unbound by ideological restraints or misplaced party fealty.

That’s William Donaldson, former head of the Securities and Exchange Commission. President Obama thanked both Mr. Volcker and Mr. Donaldson for their counsel, which, given the nature of the Obama proposals, was “old school” in more senses than simply a reference to the vast combined financial experience of both men. Agree with it or not, the “Volcker Rule,” enunciated by the president Thursday—which would keep a bank from having anything to do with investment vehicles such as hedge or private equity funds— certainly signals Mr. Volcker’s return.

It is a fascinating resurrection. Mr. Volcker himself hasn’t changed his thinking. What has changed is the environment. The heavy, popular furor as big bank profits and big bonuses are rolled out likely played a role in the new Obama plan. That plan includes flat-out limits on bank size and restrictions on industry consolidation.

Just last month Mr. Volcker was pushing the essence of what’s now the “Volcker Rule” to a group of European bankers gathered at a Wall Street Journal conference in Horsham, England. I wrote then that he sounded like a disappointed and tough school master as he dismissed the bankers’ ideas for regulatory reform as “inadequate.” Now, he’s given them a test.