Try not to be cynical, the gangsters dare ya

Volcker Rule Dead on Arrival.

If we have learned one thing in the Global Economic Downturn (TM) it is that leverage kills. For all the venial sins of securitization, credit default swaps, sub-prime lending and the myriad creative financial products, but for the the mortal sin of Leverage would our economy have survived.

The lesson we should have learned is that all things are forgivable if done without leverage, or at least 30:1 leverage. This is the sage advice of Paul Volcker, the only guy who had the cojones to remove the punch bowl in the 1970's and subsequently triggered the 20 year economic boom.

But now we have Chris Dodd (D-CT), Chairman of the Senate Banking Committee, desiring "bipartisanship" on any regulation of the industry. Huh? The second largest majority in 150 years and now Dodd is bending to the gangster* Republicans? Since he's not running for another term, methinks Dodd's acquiescing to his future employers on Wall Street.

Money quote: “Chris is retiring so he wants to end his career with an important regulatory reform bill and he wants to make the bill bipartisan,” the staffer said. “He is not going to risk bipartisan support to make the White House happy.”

Ya, right. Bipartisanship.

*The previous chairman: a wonderful vignette about Richard Shelby (R-AL) from journalist Patrick Byrne (from the Columbia Journalism Review):

There had also been some victories. Like that time that Patrick called Senator Richard Shelby (R – Alabama) a “gangster.” It was in October 2006, and Shelby, the chairman of the Senate banking committee, was spending a lot of time on television defending hedge funds accused of selling phantom stock. When the Senate held hearings on hedge funds, Shelby stacked the panel with friends of David Rocker.

So Patrick went on a radio program and called Shelby a “gangster.”

Shelby invited Patrick to meet him on Capitol Hill. Patrick made the trip. He waited in an ornate conference room for an hour. Then Shelby entered. The Senator referred to himself in the third person: “The Chairman of this Committee believes that you are trespassing on matters that are under hisjurisdiction.” Then he just sat there and stared Patrick down. It was as if…well, it was as if Shelby were a gangster.

If Shelby is Capone, then Dodd is Bugsy Siegel.