volcker rule

Paul Volcker lays out his argument in the New York Times today for "Volcker rule'' -- President Obama's new proposal to rein in "too big to fail'' institutions by limiting the size of banks and keeping them out of riskier businesses like proprietary trading, hedge funds and private equity.

    But those who suspect that the proposal is window-dressing for the more tepid approach favored by Treasury Secretary Tim Geithner won't get much comfort.

    Volcker starts off well, identifying the core problem of protecting institutions considered too big to fail.  "Public outrage over seemingly unfair treatment is palpable," he says.  It creates "moral hazard'' and it gives the biggest institutions "competitive advantage in their financing, in their size and in their ability to take and absorb risks."  He even invokes Adam Smith, the father of free market theory, as a supporter for keeping banks small.

      But then there is this jolt: