The Volcker Rule: Banks have reason to be apprehensive

“Wall Street is preparing to swallow a bitter pill as the U.S. government finalizes a last dose of medicine for the banking industry to ward off a future financial crisis reported Joanna Slater of the Globe and Mail.” “After nearly four years of negotiations, U.S. regulators are expected on Tuesday to approve a definitive version of a contentious rule to curb risk-taking by banks.  Known as the Volcker Rule, the measure forbids banks from engaging in trading solely for their own profit.  Defining the limits of proprietary trading has proven a slippery endeavour.  Ever since the United States passed a financial-reform law in 2010, regulators and the banking industry have sparred about what should and should not be allowed. The final version of the rule marks the conclusion of that battle – and will indicate which side gained the upper hand.” “Tuesday is ‘as big a day as there will be’ in the journey to reform the banking industry after the financial crisis, said H. Rodgin Cohen, a partner at Sullivan & Cromwell LLP in New York who is considered the dean of Wall Street lawyers. ‘This is a rule geared obviously at the big trading banks and has enormous ramifications.’  Mr. Cohen said that among his clients, ‘There’s trepidation as to substance, but there is also concern about error’ given the complexity and length of the rule (together with a preamble, it is reportedly close to 1,000 pages).” Read the full article here. Raymond Matt, CFP, CLU, TEP, CHS

Post a Comment


Subscribe to: Post Comments (RSS2)