A poll I am running indicates this.

“The word around Washington is that the Democrats are desperate to demonstrate their anti-bank mettle in the lead up to November 2010 and want to see something which allows them to tap into anti-bank fervor among likely voters.”

However the voters stand on the incredibly divisive health care debate, it seems like the Volcker Plan has been specifically engineered to try to ride current American anti-bank sentiment to regain some of the political capital that has escaped the Obama administration in the last few months. And, according to http://www.newsy.com/videos/change-of-plans-obama-shifts-focus, The New York Times says there couldn’t have been an easier target if Obama wants to pick a fight:

“They have become the perfect foil for the White House as it tries to lead the Democratic Party out of its post-Massachusetts morass — and to change the channel from the seemingly unending debate over health insurance. As the White House hopes to define the fight, the enemy is not big government but big money.”

See these two posts:
http://www.creditwritedowns.com/2008/10/charts-of-day-us-macro-disequilibria.html
http://www.creditwritedowns.com/2009/10/a-brief-look-at-the-asset-based-economy-at-economic-turns.html

In my opinion, these regulatory moves are not going to be good for asset prices as you suggest.

prop desks utilize bank balance sheet to fund the warehousing of a massive amount of assets. divorced of the deposit-base funding, these prop desks will either have to be unwound or find non-bank funding, ie become hedge funds.

these assets are held on the balance sheets of hedge funds, banks, central banks and foreign investors.

hedge funds are down and likely to stay down, as prime brokering figures to suffer under this scheme as well. central banks are trying to reduce their exposure or at least run it off. foreign investors are overexposed and have been wary/reducing exposure for some time.

and now the banks themselves are going to be de-fund these monsters? where do all the assets go?

answer, i fear, is that they will have to be “right-sized” to fit the new funding profile. and that means some titanic price decreases, does it not?

this has got to be puffery. obama is talking about S&P 200.

Let’s see whether this is meaningful reform from the details. As I said, no damn sunsetting. And no targeting specific institutions or it will be thrown out as unconstitutional.