Date means a flurry of activity for brown. We go inside ups to see how the utility the delivery giant handles it all. Good morning, everybody. You are watching Market Makers. I am erik schatzker. And i am scarlet fu. We are beginning with a Huge Development in detroit. General motors is naming their new ceo, a story that bloomberg broke. She will be one of the first women to lead the automaker. Esterday that the 65year old would not stay for much longer. Tell us about mary barra, she has been there for 30 years . Her entire career. She started as an intern in one of the plants, starting as a plant manager, running manufacturing, briefly in charge of hr as she before she took over as the first female in charge of products for an automaker, now the first woman to run an automaker around the world. Ands an incredible story the interesting thing will be to see what i first heard on the news this morning, how the other guys react who were perhaps in line for the job. A lot of people were perhaps expecting mark royce. He is a serious car guy and also an engineer. Studied Electrical Engineering before getting her mba at stamford. Resume, stamford, head of manufacturing, really just a second pat, head of product in 2011. Her real calling card, slashing , tryingnt redtape costs to taper what gm does while still building cool cars to make more money. Lets go back to the other candidates. Mark royce was not the only contender. There were at least two more . Stephen gursky was in the running, he is head of your european operations right now. A thankless job. Cfo was also seriously considered. Have ae to basically background in finance or a background in engineering to run a detroit carmaker. Those are sort of the gold standard. Has the engineering pass. Thing about detroit now, she kind of stands out, especially a woman, in this industry. It is interesting, her father works there as well. It is interesting, dan ackerson, i remember what he said a couple the detroito all carmakers are run by noncar guys, but someday a car gal will run one of these companies. Think about it, they are. He has no automotive background to speak of, or engineering. Alan mulally is an engineer that comes from boeing. She really is the only car guy in town and it just so happens that she is a woman. Matt, thank you very much. Our own auto expert, matt miller. You have spoken to her . A number of times. One of the things that she said to me that stuck with me ever since, when the new corvette was launched, it was the most important car of 2013 and i thought it was amazing that you could get the car were such relatively little money and i thought about getting it myself but she said to wait until the camaro comes out, that it was a better track car. She said that they had designed it to be a weapon on the track. Anyone who doubts her credentials can think of that conversation . The 1928, she is responsible for that. At 10 30 this morning, an exclusive interview with the person who put her in charge of , at whitaker, they helped to lead the company out of bankruptcy. We will be returning to this story shortly, but the other top story today, washington, a snowstorm shut down the government, but banking regulators are still hard at work. The volker rule will be ushering in a new era in banking business. Peter cook has been covering the years long process that finally culminated today inuvo. Will wall street be happy with the results . We know they have been pushing back for the last couple of years. The banks hated it from the start, they will not like it anymore today, and they will not at and they will especially not like this tougher version. After three long years of debate even among the federal regulators who have to implement this rule, on wall street and in washington, they believe it is finally done. The rule, first conceived by paul volcker, designed to reduce risk in the Financial System by specifically banning banks from trading from their proprietary accounts from the first time, limiting Bank Investments to hedge funds and private equity. Banks will not like the final hedging investment language, that probably stands out the most. They must show that hedging the mitigates one or more specifically identifiable risk, meaning hedging, like the london whale trade. Those are not allowed. Her must be specific risk that is being offset. More news on Market Making, their bread and butter business, trades must not exceed the reasonably expected nearterm demands of clients, which is pretty broad and it remains to be seen if regulators and thanks agree on what reasonable and nearterm might be, it is that kind of enforcement that is so important Going Forward. They are all expected to adopt the rules in the next hour or so. There will be some no votes in the mix, some regulators who think that this rule goes too far, but this is a victory for those pushing for tougher rule. Any other curveballs in the final vote . A couple of specific things that are new wrinkles based on what we saw, sovereign debt trading will not violate and will be exempted, a relief to europeans in particular. There is talk about compensation packages in your. That would seem logical. Bankers are going to want to read the language carefully. They must the test in writing place,pliance program in but more importantly they do not have to attest that the compliance is actually happening, which is a much lower bar than some on wall street had feared would be put in place and one of the reasons that this has gotten more latitude than they expected. Thank you for the rundown. Peter cook, bloomberg televisions chief washington correspondent. Nilo richardson worked at the cftc while regulators there were trying to write the rule. She is now a senior economist for bloomberg government. Is this lets put it this way , the regulators want us to believe that this is a strict volker rule, stricter than wall street wanted. Give us your assessment. The first thing that regulators need to do is rename it the diamond rule, that is the only part of the statute regulation that has any teeth, the hedging part. The idea of tying every risk to every trade will surely throw compliance offices around the country and in these tanking divisions into a tailspin. How do you do that . How do you tie specific risks to trades that come directly from the jpmorgan debacle . That is going to be the real teeth of this regulation. Areou are saying that those the real teeth and perhaps the only teeth. Why is it that the rest of the rule, in your opinion, has no teeth . You have to think like a lawyer to understand this eerie of the more vague the rule, the easier it is to get compliance lawyers scared enough to make sure that they draw their own bright line about what his trading, hedging, and Market Making, and sometimes that is the intent on vague regulations. You want the compliance divisions within the banks themselves to set the terms. Rights what this sets up now, giving banks a lot of leniency to draw their own bright minds and it will take a lot of time for banks and regulators to come to terms on just how to interpret this language. A lot of it will depend on the Regulatory Environment that the banks are operating under as the economy improves. Will that situation be better for banks as they attempt to figure out the rules of the road . Absolutely it will be better for banks when the economy improves, but remember that part of that improvement will be an increase in interest rates. How do they hedge this risk Going Forward . That will be a crucial problem is the Federal Reserve begins to taper. As the economy improves, they will be competing with other obstacles, hedging the improving economy based on their portfolio that they have now. Cast your eyes into the future. We are being told that the volker rule will not be enforced for another year. The president announced it back in january of 2010 and banks have been responding since then, suspending their prop trading desks. In 2015 how different are things going to be from the way they 2009 . N first and foremost, metrics will matter. That is the only way that regulators are going to be able to distinguish prop trading from Market Making to tying hedging to specific and identifiable risks. Banks are already comfortable measuring risks on a daily basis , now they are really going to have to step up their measurements of inventory, because that matters in determining Market Making from prop trading and turnover of inventory as well. These metrics will determine how forcibly the enforcement will follow. Hard to findo be baselines right now, there is still an element of prop trading in all banking activities, so finding a baseline in particularly ill liquid markets will be very difficult. So much for resolving all the confusion. Nilo, thank you very much. Really set the scene for us. The new day for american banks is here, but there is still a raging debate and we will your from both sides, pro and con, next. Ups does the math, a new algorithm saving the Package Delivery service millions. You are watching Market Makers, on bloomberg television. Schatzker, you are watching Market Makers. Regulators are poised to approve the volker rule, the sometimes controversial provision of the dodd frank act was always going to ban banks from proprietary or prop trading, in other words making bets with shareholder money. The challenge was writing a rule that prevented banks from gaming the system by dressing up the trade as Something Else. Making sure that clients still get the services they need and Financial Markets still have enough liquidity to function properly. Here to assess the winners and losers in this tugofwar, director of competitiveness and growth at the leftleaning center for american progress, and here in new york, richard works with many of the bank wall street firms. Lesbian with you. We have not seen the final rule until this morning. Balancestrike the right between safety and soundness on the one hand, presumably what paul volcker was after in the first place, and the competitiveness that american Financial Markets required to attract capital . Which is part of what made this country, or at least this city, in any case, the worlds Financial Capital . Thank you so much for having me. I actually have not seen the final rule yet, i have been stuck in this snowstorm in washington, d. C. , but i have been reading a lot of the same reports as you and i expect to see a stronger vocal rule volker rule than we found in the 2011 draft, which i think is a good thing. I do not think it will stop banks from being competitive, but i do think it will safeguard the Financial System. Richard, your take . Hurt thek it will competitiveness of banks, how could it not . When you have other banks who are not subject to the restrictions of hedging on trading, they can provide capital cheaper to their clients more effectively, how can that not marginally hurt effectiveness . Perhaps marginally is the point, perhaps marginally is enough. Regulation through a certain lens is just raising the bottom of the glass. The more freedom you give the banks, the more trouble you might have. You have to look at the trouble that cause the issue that gave rise to all of this. Of course, it was never prop trading. No one has been able to identify a single bank that has gone under because of prop trading. That is the context that all of this needs to be kept within. The contention that prop trading did not lead to the financial crisis of 2008, 2009, the volker rule tries to address that had on, but it prop trading was not to blame, how far do we really get . There were many causes of the financial crash and prop trading, i think, absolutely destabilizes the Financial Markets. There is the conversation about what makes the banks more competitive, going into another financial crisis will absolutely hurt bank competitiveness. To what degree prop trading played a part in the last crisis is not the entire issue. The question today is what part could it plan the next crisis . Obviously both reagan leaders and legislators have that concern and it is something theyre trying to guard against. Because it is prohibited at banks, i think you think that those people are going to go to New Hampshire and raise cashmere goats, you are giving you are fooling yourself. Who is going to provide the leverage loans to do that . The banks who are prohibited from having those operations in that prohibitive environment. It is very questionable if Systemic Risk is reduced at all by what we are doing. Lets take that off the table for a moment, what about the cynics among us who expect that the very least banks to find the to get around specificity of these rules . That is part of what makes wall street so competitive, right . Research wherever it can be found, they will be doing Something Else as well, searching for congress to cut overon this, like they did 30 years of glasssteagall. The question is, alternately, where is the bond rating going to be set . We do not even know what the volker rule even means yet. The language is not very specific at all. How you determine the reasonable nearterm expectation is security. That is vague. Hedging against a specific identifiable risk . What does that mean, at the end of the day . Like a duckt walks and talks like a duck, it is a duck. Who determines what a duck walks like and talks like . All five regulatory agencies. I think of what is important here is we have smart regulators who have the resources to do the job. You are absolutely right, we cannot have congress starving them from the resources they need to do it. The bottom line is you can take it from the gao, take it from the fed, the last crisis cost us into the trillions and americans have still not made their way back. I fundamentally reject the premise that what makes us more competitive is letting banks do whatever they want. Top hole on the street and that is not what the public is expecting from regulators in 2013. Paul volcker, the rule bears his name, says the spirit of wall street is what he is trying to change with this rule. Five years from now, what will this culture really look like . That absolutely remains to be seen. One of the most interesting parts of the rule will be how ceos adapt to it. They have a role in making sure that there programs are compliant. A lot of people like myself that hoped that it would go even farther. As they said, the rules are necessarily a bit vague. That is why i hope that we see ceos taking the spirit of the rule on board. What about reinstating glass steagall, then . If the volker rule is not seen as strong enough, not enforced strongly by regulators, i think you will see even more growing support from republicans and democrats on the hill for that, and i understand that, but the most important thing right now is making sure that we understand the rule and making sure that regulators can enforce it. Jennifer, richard, we have to leave it there. Thank you both so much. Makers, up on market General Motors makes history, for the first time a woman will run the company. We will be right back with our exclusive interview coming up on Market Makers, right here on bloomberg television. We are approaching 26 minutes past the hour, time for bloomberg to go on the markets. Kind of a mess today. The major indexes are off just slightly, coming on the heels of the 39th record high for the s p 500 this year. Incredible. In the absence of any news, lets keep moving stocks higher. , upne stock rising today almost 4. 5 , groupon is making promising progress and he thinks the shares may rise to 15 by 2014, higher than they are now. They have doubled year to date already and he thinks the company is going to improve their deal quality, density, with Search Engine optimization as well. I cannot remember anything the last i purchase anything on groupon. Can you . I have not purchased anything on groupon. We will be back in just a minute. Live from bloomberg headquarters in new york, this is Market Makers. Welcome back to Market Makers. Im scarlet fu in for stephanie today. We have lots to cover including jim whitaker, the c. E. O. And chairman. The new c. E. O. At g. M. It hasnt been formally announced. It has been. We broke it earlier. Its not a bloomberg exclusive. These are the top business stories around the world. Changes at the top. Chip wilson steps down as chairman of lululemon. And portevan replaces christine day. Lululemon had to recall from sheer yoga pants earlier. Black fish criticizes sea world for the way performing whales are treated. Three music acts have been canceled they canceled concerts at sea world park. Willie nelson, heart and bare naked ladies. They call black fish a dishonest move. In johannesburg, leaders around the world joined with South Africans to mark the life of Nelson Mandela. It was at the biggest soccer stadium and was the first of three events this week. President obama was among those paying tribute. We will never see the life of Nelson Mandela again. But let me say to the young people of africa and the young people around the world you, too, can make his lifes work your own. General motors made History Today as we were just telling you, naming mary barra the c. E. O. Of the company after dan ackerson retires in january and will be the first woman to lead a global automaker and will be doing it right after the u. S. Government exits its massive financial stake in g. M. The former c. E. O. Of General Motors was credited for turning the company around and is on the phone with us for a bloomberg exclusive. Thank for you taking timeout for Market Makers. Lets talk about mary barra, you were the c. E. O. When she was put in Human Resource i