- Jun 2007
Why do we trust that banks aren't going to go broke and take the whole economy with it again?The Federal Deposit Insurance Corp. board voted 3-1 Tuesday to give big banks more leeway to make risky short-term bets in financial markets by loosening a landmark but highly contentious regulation known as the Volcker rule.
The FDIC and four other independent agencies have dropped their proposal to tie the rule to a strict accounting standard — a move that banks argued would have made it more burdensome by subjecting additional trades to heightened supervision. Instead, regulators will give banks the benefit of the doubt on a much wider range of trades, according to the text of the final rule.
Tells you all you need to know right there.As amended, “the Volcker rule will no longer impose a meaningful constraint on speculative and proprietary trading by banks and bank-holding companies benefiting from the public safety net” of insured deposits, Gruenberg said.
Banks, meanwhile, applauded the new rule.
But if anyone's interested, here's the link:
The rewrite is an attempt to clarify what kinds of activity would be exempt from the proprietary trading ban for market-making, hedging or underwriting purposes.