A piece today by derivatives expert Satyajit Das helps put to rest some if not all of the doubts expressed about the Volcker Rule's potential efficacy.

Much of the criticism by those who say it doesn't go far enough focuses argues  that forcing banks that get deposit insurance to shed their proprietary trading operations would not necessarily eliminate systemic risk, since taxpayers could not afford to see huge trading operations bring down the markets even if their deposits were still protected. Mister Market is just too important for that.

It's a valid argument in my view. But Das says it misses the Trojan Horse aspect of the Volcker Rule.

He's making a subtle point, and it's not entirely clear how the scenario he envisions would play out. But Das essentially says that by re-establishing the line between commercial and investment banking, the Volcker Rule would end up knocking investment banks back down to their proper size, which could indeed limit or eliminate the risk they pose to the system.

Much depends here on just how reliant the banks are on prop trading, and right now the banks are trying to have it both ways by saying it represents less than 10 percent of their profits even as they fight tooth and nail against it, such that one day the Treasury says no can do, and the next, the White House says sure, no problem. Indeed, it's starting to feels like Tiny Tim Geithner and Tall Paul Volcker are endlessly arm-wrestling in a tavern somewhere, while President Obama just sits and watches it all from the bar.

Anyway, something surely doesn't compute in the banks' arguments against the rule. Surely Goldman depends heavily on proprietary trading or it wouldn't be so profitable, unless of course it's screwing its customers so badly that Goldman should get whacked for front running.

That said, Das' contention that the Volcker Rule would lead Goldman and others to return to private partnerships seems like a bit of a stretch, as my colleague Matt Quinn has pointed out.

Then again, if Yves Smith is right and Goldman has finally outsmarted itself over the Greek debacle, it may have little choice but to back to being a partnership regardless of what happens to the Volcker Rule.

Here I can't help but note that Ben Bernanke used true weasel words in his testimony to Congress yesterday when supplying a verbal wrist-slap over Goldman's sale of swaps that helped Greece skirt its debt rules. He said swaps are "properly used for hedging."

Does that mean Bernanke thinks swaps should only be used for hedging or that Goldman used them properly, or even both? Who knows? But that may be neither here nor there, because the central bank's investigation into the Greek debacle won't matter if the Europeans just ignore whatever the Fed says here.

Given the Fed's track record on bank regulation, I certainly hope they do.

It's not as if the E.U. sees eye to eye with the U.S. on corporate behavior. Remember the former's antirust actions againt GE and Microsoft. I would argue that blocking the Honeywell deal and forcing the unbundling of Windows adn Internet Explorer changed those two companies' very business models.