Our capitalist system is built upon risk. Investors risk their money in new enterprises. Entrepreneurs risk their time and careers. Some ventures succeed and others fail, and the market determines which is which.
Sometimes, however, there are other risks. The Congress is currently considering financial reform and the Volcker Rule is at the center of the debate. This Rule would prevent banks from using their own money to invest in risky hedge funds and other similar investments. The reason for the Rule is that people who deposit their money in a bank should not see their risks multiplied exponentially because a few bank executives want to get rich quick. A hedge fund may provide a windfall, but the Volcker Rule is a regulatory hedge against greed leading to the kinds of risky decisions that will redound badly not just upon the bank executives taking the risk, but upon the average customer of the bank. There is a danger that the Rule will be suspended for further study, but Washington is not a university, and “study” is a euphemism for killing the Rule. Congress should resist the lobbyists for the banks and pass the Rule.