Paul Volcker, Reagan's Chairman of the Fed is too much of a socialist for Today's GOP

One of the key provisions of the recent Finance Reform bill passed by Congress is 'The Volcker Rule' which would prohibit banks from proprietary trading with their funds that are guaranteed by the government such as customer deposits that are insured by the FDIC. The details of the restrictions have been left up to regulators to define the limits of the law.

Volcker, who was obviously good enough for the Godfather of modern conservatism Ronald Reagan, insisted on tighter rules than is in the final bill. One of the concessions made to get enough conservative Democrats to vote for the bill was to pass the details on to banking regulators, much to Volcker's displeasure.

The objective is to prevent the irrationally risky and callous behavior that led to the investment banks taking crappy mortgage portfolios and leveraging them at a 30-1 ratio to make a bad situation so much worse. We still have no idea just how much bad debt is being helf by the investment banks.

The Devil, as always, is in the details. The law could end up with enough teeth to prevent the sort of risky behavior to prevent another meltdown or it could be so narrowly defined that it becomes little more than window dressing.

The banks would love to be able to head back to the casino with a new pile of chips and an almost unlimited tab from the house. The Republicans, in their anti-regulation fervor would rather repeal the entire bill, or at least minimize the restrictions. The GOP's echo chamber of anti regulatory fervor has them believing that the financial meltdown wasn't the result of risk and avarice gone wild but too much regulation that forced Fannie Mae and Freddie Mac to give home loans to lazy poor people who can't even hold down job for more than a year even when times are good.

That puts Volcker, who has a number of allies in the Obama administration far to the left of current Republican thought. In their lexicon, he must therefore be an anti-American socialist.

It's a sad reflection on current affairs that even a measured voice of rational conservatism is not sufficiently extreme for Republicans.