The White House sent its version of the Volker Rule bill to Congress for debate. The Volker Rule, named for former chairman of the Federal Reserve, Paul Volker, would restrict the actions of big banks.

The Volker Rule would ban banks that take federally insured deposits from investing in hedge funds or private equity funds and from making trades that are for the profit of the banks, not for their customers, better known as proprietary trading.

If mortgage companies start to feel like they're losing elbow room, it's probably because they're starting to get nudged by the Obama administration. The folks in the White House are planning to kick off a campaign to squeeze mortgage companies to lower payments for even more borrowers who are in trouble. The $75 billion program, financed by taxpayers, to keep homeowners from falling into default appears to be in trouble.

Mortgage lenders have increased their efforts to modify borrowers' mortgages, but most of them are still in a trial stage, which will last up to five months. Only a handful have been made permanent, which isn't good enough for Washington. The Treasury Department's assistant secretary for financial institutions, Michael S. Barr, told the New York Times, "The banks are not doing a good enough job," continuing, "Some of the firms ought to be embarrassed, and they will be."

The Wall Street Journal reports (subscription required) that "Administration officials on Sunday criticized Wall Street banks over their high compensation packages and their lobbying against plans to tighten financial regulations. But the administration's tone appeared muted compared with attacks made earlier in this year, as Democrats -- with an eye toward the 2010 midterm elections -- seek to put a positive spin on recent economic developments."

It's easy to understand why the Democrats are toning down the rhetoric: They passed an unprecedented corporate welfare package, and pledged to clamp down on compensation practices that encourage excessive risk. Then Obama appointed an executive pay czar who doesn't have any real power and, aside from begging Ken Lewis to toss back a few scraps to create the illusion of a crackdown, the Democrats have done literally nothing to curb compensation practices at firms that are existing on the taxpayer dime.

The American auto industry failure is no joke. There is no consensus regarding a solution and the stakes are very high for all of us. We cannot really fathom the complete repercussions from whatever approach we take to resolve this very difficult situation involving General Motors (NYSE: GM), Ford (NYSE: F), privately held Chrysler and the UAW.

There is still no resolution to the gargantuan task of re-working the U.S. automobile industry. The White House this past weekend said that while the administration is trying to work out various scenarios to rescue the ailing industry, it has not come up with a solution yet and the people involved don't expect to make any announcements for a few days.

I have been following the news about the auto industry like the rest of the nation and I have been writing about many of the issues that we face. Yesterday, I added a bit of irony Sunday Funnies: Feds could buy GM & Ford, but this is no laughing matter.

When companies collapse amid accounting fraud and massive governance failures, there is rarely anything left for swindled shareholders to sue for: if the company had assets to settle lawsuits, it wouldn't have collapsed.

Now the White House has sided with investment banks and filed a brief in a Supreme Court opposing the idea that shareholders should be able to seek damages from firms that were involved with the company. The SEC has sided with the plaintiffs in the case, and had hoped the Bush Administration would too. But it was not to be.

Securities Industry and Financial Markets Association President Marc Lackritz has one of the funniest defenses for not allowing investment banks to be held accountable:

"Investors already receive substantial protections under the law, and the Securities and Exchange Commission and other securities regulators are already armed with all the necessary regulatory tools to recoup lost money for investors,"

Hah! Try telling that to anyone who lost their life savings in the collapse of Enron.

There's really no reason that banks shouldn't stand to pay damages if they fail to catch a fraud at a company they are involved with. They are paid far too much money for the work that they do to just walk away when they mess up badly.

Today we are supposed to learn from the Federal Reserve Board if interest rates will rise. There is plenty of speculation as to whether rates will rise by a quarter point or a half point. I don't think they should do anything. I say take a rest for a couple of months, guys!

They have been sitting around trying to decide where the economy will be in 18 to 24 months. What are the chances they can figure that one out? Close to zero! What are the chances they cause a recession instead of preventing one? About 50/50! 

If they know whats going to happen 18 months out then why don't they each make a zillion dollars in the stock market? I would like to ask them where the price of gold, or oil, Microsoft or eBay will be in 18 months. They are speculating just like the Wall Street analysts!

When interest rates were 1% or 2%, an increase did not matter. But the higher they go the more each increase matters. They should take a breather and cogitate a while. It would show some financial maturity.

Here's my prediction -- if we have a little inflation in 18 to 24 months because they guessed wrong, then we can live with it. But if we are in a recession by then, then good or bad, the Democrats will be in the White House and the Fed will have put them there!

Previous Rant: "Take the chalk away before Bernanke hurts someone"