Irony of Ironies

The "European Volcker Rule" is emerging!  What we like about the linked article is the broader principle poking through the surface.  To wit:

    "... separate large banks' riskier trading activities from their deposit-taking business ... to keep client deposits and other operations [eg, payment processing] serving the real economy from being affected by a bank's failure."

                                                    AND

    "Several lawmakers argue all trading activities should be completely separated from the retail operations."

    What we see taking form is advocacy of "narrow banking" and "full reserve banking."  Europe - especially the UK - has hosted far more debate on these innovations than the US.  In brief, the innovation is that banks retain all deposits.  No lending, no risk-taking, nothing!  Banks would be free to pursue their normal activities of lending and market-making but could do so only with segregated equity and debt capital.

    It's simple.  It's transparent.  It will end bank bailouts (because it's politically feasible to let the banks fail).  Largely speaking, both bankers and regulators hate the idea - which means it must be right.