If you needed to appeal to one authority on banking regulation, you could do worse than to consult Sheila Bair, the former chairwoman of the FDIC. And now she’s advocating scrapping the Volcker rule and starting over. She comes at this by looking at the spectacle of MF Global – a brokerage house that would not be covered under the Volcker rule – and asking whether they would be permitted to trade depositor funds on their own account if they were a bank. The answer is far less clear-cut than it should be – and that’s the problem with how the Volcker rule emerged from the sausage grinder of the regulatory apparatus.

Former Senator Jon Corzine faces a House Agriculture Committee panel today, where he will testify that he doesn’t know “where the money is” from customer accounts that was used by his former company, MF Global, to trade on the company account.

Joe Weisenthal points us in the direction of Corzine’s testimony, which he will give without pleading the 5th Amendment, despite still being liable for criminal charges in the MF Global case.

In retrospect, the banks had a pretty sound strategy with Dodd-Frank: fight it during the legislative process, but not too hard, allowing lawmakers to think they’ve accomplished something. Then, during implementation, bend the regulatory apparatus to your will, gutting the law before having to follow it. That has been extremely successful, especially because Dodd-Frank wasn’t really a law so much as a promise to write a law later.

The latest victim of the finance lobby’s efforts on Dodd-Frank is the Volcker rule.

Basically, the banks successfully got the regulators to define “hedging” so broadly that virtually any proprietary trade could be seen as a hedge.

It’s very important to keep on top of the implementation of the Dodd-Frank financial reform bill, because Congress basically outsourced the writing of the bill to the regulators. There are 67 studies and 200 rules that regulators will have to conduct, enact and implement. And so it’s worth looking into their progress, which has already begun.

This will be a jam-packed week for the Wall Street reform conference committee, with a final draft expected to go to both chambers of Congress by Friday. And many of the more important details remain up in the air. In particular, the consequential, hard-wired reforms designed to reduce risk and even the size of risky markets still have to clear the final hurdles.

The New York Times has a preview of the conference committee for the Wall Street reform bill, which the President would like completed by the time of the next G-20 conference in Toronto at the end of the month. They narrow down the whole negotiation to basically three proposals expected to be the major sticking [...]

Though the New York Times’ Joe Nocera may be off on point on changes to credit rating agencies, the overall thrust of his article is quite correct. Nocera, like many reformers, is a structuralist, believing that the very structure of Wall Street is at issue, not the way it gets regulated. And therefore, he would naturally look at what passed the Senate and say that it comes up far short.

We shouldn’t assume a perfect analogy between strengthening the Volcker rule and spinning off the swaps desks. Each has independent merit on its own terms, and one shouldn’t be traded away for the other.

Fielding questions with progressive bloggers, House Speaker Nancy Pelosi told FDL News that she personally supports two key measures of the Wall Street reform package that reformers will fight for in conference, and that the House conferees on the bill will have a goal of seeing the most progressive legislation possible come forward, even if that contrasts with the bill their own chamber passed last December.

It’s clear who has driven the process of more discretion for the regulators, less hard constraints on the banks and the elimination of anything that would actually alter the way Wall Street does business — the White House and the Treasury Department.