Regulator Explains Complex Financial Reform Entirely Through Movie References

I know the Yale Club only from Fitzgerald's Nick Carraway of Gatsby fame who "...took dinner usually at the Yale Club." In fact in the new Gatsby movie Nick (Tobey Maguire) and Jay himself (Leonardo DiCaprio) mention the Yale Club. If you haven't seen it, The Great Gatsby (2013), my take is that it’s full-on super cinema. Go right after we're done here. In fact, if you do, it will be a great finale to our little mini movie montage here at the Yale Club.

But, that's it, right? No need for other rules or regs! Wait, umm, well, actually, some of you folks came by planes, trains and automobiles. Now that's a funny movie (1987's Planes, Trains and Automobiles) with Steve Martin and John Candy, as Neal and Del. One of my favorite scenes is when Del falls asleep at the wheel and they slide between two semis—almost. The car’s demolished but Del says not to worry, “That’ll buff right out.”

Well, you folks are sharp. Remember Robert De Niro talking with Billy Crystal in Analyze This (1999). “You…you, you got a gift…oh yeah. You saw that there was something I was trying to do and you…you figured that out. You’re very good, you. The point is that some regulations are, yeah they are, needed in society.

In fact, most people outside of this room—and I know some here, too—actually want robust rules and regulations governing the financial sector. In fact, a lot of people feel pretty strongly about the matter. Remember It's a Wonderful Life (1946) with Jimmy Stewart?

Well, it's that type of fervor—a Network (1976) “I’m mad as hell, and I’m not going take this anymore!” type of passion that is demanding financial regulatory reform. They want reform because they lost their pensions and their savings in the market meltdown. I speak with and email people every single day on this subject.

Banks aren’t inherently bad. They’ve done a helluva lotta good around the world. Most of them do absolutely great things. With that as our backdrop, let's talk about two key and time sensitive issues that impact you, international bankers and banks, and that need an infusion of balance: the Volcker Rule and cross-border or ET issues (Extraterritorial, not Steven Spielberg’s 1982 E.T. The Extra-Terrestrial—“E.T. phone home”).

Remember in Wall Street (1987) just before Bud—Charlie Sheen—is arrested? Lou Mannheim—Hal Holbrook—says, “The problem with money, Bud, is that it makes you do things you don't want to do.” If banks continue to speculate for themselves, and watch out if they bet against their customers ever again, I think that may mark the beginning of the end for big banks.

The populace and those in government will come back like a Rambo movie (1982, 1985, 1988, and 2008). And frankly, I’d be in the camp saying “You go, Rambo.”

So, as hard as it is to believe, I think bankers should support a fairly tightly written Volcker Rule—out of self-preservation if nothing else—with regard to hedging financial risk. I’ve written to Chairman Bernanke and my fellow regulators in the past on this matter, but think we have an obligation at the CFTC to give specific language in this regard. I hope we will do that very soon.

Well now, some of you are skeptical. Hang with me for this last issue. It’s important, so frankly my dears, I hope you do “…give a damn.” (Gone With the Wind—1939). Let’s talk cross-border (ET) issues.

This can be done. It needs to be done. These aren’t new issues to us. By putting the guidance and targeted, staggered compliance together and not creating an additional action, we can fulfill our mandate from Congress and President Obama under the financial reform law, provide needed certainty to markets, and foster increased international cooperation and comity. I believe this will have the added benefit of promoting a more globally harmonized rule set. Here’s why: Remember the movie with Kevin Costner, Field of Dreams (1989)? The voice from the Iowa corn field whispers, “If you build it, he will come.” Well, instead of baseball players, my view is if we and a few others like the E.U. build it—financial regulations—they—the entire financial regulatory community—will come and be part of new and improved, coordinated implementation of more closely aligned and harmonized regulations. This is a more balanced approach to cross-border issues.

Remember Argo (2012)? Ben Affleck says of the ploy to pose as movie makers when trying to get hostages out of Iran, “It’s the best bad idea we have sir, by far.” I hope it wasn't too bad an idea to do a little cinefile-laced policy trip with you guys. By the way, if you didn’t have much of a clue on the movie references, your boss thanks you. You work too hard. You gotta do more old school bankers’ hours. Do more “me time” or family time—seriously.

I probably need a governor, ya’ know, to slow me down. Actually, maybe a governator will work. As he said in Terminator (1984), “Hasta la vista, baby."

Thanks. Enjoy the show.