Canada Just Threw a Grenade Into Elizabeth Warren’s Trade Fight With Obama
As I understand it, the banks don’t risk their own money. They risk their depositors and investors money. The article states that the risky activity can put taxpayers at risk, but doesn’t mention that it puts the depositors and investors at risk as well. It also doesn’t seem to put the job of the employee who made the risky deal on the line. No one in the banking organization pays the price —the rest of us do wether we were involved in the decision or not
So, yes, we need the Volcker Rule or something like it.
Canadian Finance Minister Joe Oliver gave a speech in New York arguing that the Volcker Rule — a key tenet of the 2010 banking law — violates the North American Free Trade Agreement. The move underscores Warren’s warning that such deals, including the Trans-Pacific Partnership that Obama is currently negotiating, jeopardize financial reform.
The Volcker Rule bars banks operating in the U.S. from speculating in securities markets for their own profit — a risky activity that can put taxpayers on the hook for big bailouts if the bank bets turn sour. But there are exceptions to the rule. For instance, banks are allowed to hold U.S. government debt in their own accounts.
But those same banks aren’t allowed to trade in Canadian government debt. Oliver thinks that’s a NAFTA violation. Although he didn’t lay out his argument in detail on Wednesday, NAFTA, like the TPP, generally bans countries from discriminating against each other’s financial services. NAFTA prohibits policies that limit cross-border trade in financial services and requires the U.S. to treat Canadian companies the same way that it treats U.S. companies.