Paul Volcker exposed his plan to fix the financial system in a NY Times op-ed this weekend. Here are the plan`s highlights:
1 - Prevent banks from owning hedge funds and other proprietary trading vehicles
2 - Give the government resolution authority to step in, liquidate, or sell any firm it deems to be in trouble
3 - Make shareholders, management, and bondholders pay for any costs associated with this
This plan is targeted to solve the "Too Big To Fail" issue. Under Volcker's plan, big firms would be allowed to fail in an orderly fashion, with their owners and lenders taking the hit.
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