Paul Volcker asks how are we going to restore trust in government and financial regulators?

Earlier today your humble blogger asked how are we going to restore trust in the banking system.  While I am unaware of a direct connection, Paul Volcker came out later and broadened the question to how are we going to restore trust in government and the financial regulators.

As reported in a Bloomberg article,

Together they have 120 years experience in financial markets. John Bogle, 82, popularized index investing. Paul Volcker, 84, broke the back of 15 percent inflation as Federal Reserve chairman in the 1980s. 

Today, they shared the same stage in New York and this view: confidence in the U.S. financial system is broken.

Regular readers know that the only way to restore confidence in the US financial system is to require banks to provide ultra transparency and disclose their current asset, liability and off-balance sheet exposures.  This lets market participants independently assess what the banks are doing.

Bogle, the founder of mutual fund company Vanguard Group Inc. who has spent his career advocating a low-cost approach to personal investing and railing against conflicts of interest in his industry, said he would grade the U.S. financial system a ‘D’. 

Volcker, who has urged Congress to ban proprietary trading by commercial banks, said banks are lobbying to undermine financial regulation aimed at making the industry more stable. 

“There’s no question that confidence in government is shaky,” Volcker, who’s a towering 6 foot 7 inches (201 centimeters) tall, said in New York today at The John C. Bogle Legacy Forum hosted by Bloomberg Link.  

Washington is “filled up with law firms that cover whole city blocks. Lobbying firms. And it’s all living off the influence of the government.” 

The so-called Volcker rule seeks to stop regulated banks that receive support from the government from making risky bets with their own money. Wall Street firms including Goldman Sachs Group Inc. (GS) have argued the limitations could harm capital markets by reducing the role of banks. The Dodd-Frank Act, the regulatory overhaul enacted in 2010, requires that the rule be in place by July 21.

Apparently Mr. Volcker also recognizes how Wall Street's Opacity Protection Team operates.