The Senate subcommittee's report makes it very clear that what Congress wants is for the Federal Reserve immediately to implement a rule the regulator doesn't understand. Looking back, Mayer says "at the end of the day, I still stand by what I said in the May article. Often the markets are ahead of regulators and Congress. Investors will want to know if they are investing in an institution that has proper enterprise risk management in place."
Mayer calls the Senate subcommittee's report on JPMorgan's trading debacle "an example of potentially the larger policy debate on whether a financial company is too large to regulate, whether a financial company is too large to manage its risk and whether the shareholders -- in kind of a proxy environment -- can insist upon a vote on whether the institution is too big."
According to Mayer, "it is necessary for Congress to fully vet the policy issues, so the system can work as fully as possible, and then create the legal environment to enable the efficiency of the financial system."
The only way forward to finally implement the Volcker Rule and to fully address the ongoing "too-big-to-fail" debates that are threatening the U.S. financial system, is for Congress to come up with a way to include all stakeholders, including the banks, the regulators and private and institutional shareholders, in the discussion.
-- Written by Philip van Doorn in Jupiter, Fla.