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Details of Volcker rule set to be unveiled

  • A panoply of regulators are due to disclose the details of the Volcker rule this morning and then formally adopt the measures later in the day.
  • The new regulations will ban banks from proprietary trading, and prevent them from owning over 3% of hedge funds and private-equity funds.
  • Banks fear that the rules could cost them billions of dollars by making it more difficult to engage in activities that are permitted under the regulation, such as market-making, underwriting and hedging against risks. Expect the lawyers to go through the proposals to see what could be struck down in court.
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Comments (9)
  • Jiaberg-Sydney-OZ
    , contributor
    Comments (156) | Send Message
     
    Volcker's proposal takes the form that ORIGINALLY spawned the HUGE US investment banking industry by world standard and hence its inherent added risks otherwise not possible. By limiting commercial banks from heavily participate in every day investment banking activities, this allows much less resourced (low capital) independent investment banking industry to thrive in the decade from the 1930's to the mid-late 1990's.

     

    The independent investment banking industry's low capital in relationship to the substantial influences and share of the non-deposit-taking-len... financial markets that they exert add to the risks to the whole financial system. This low capital base requirements are against the logics of the mandated need for significant adequate capitals for commercial banks.

     

    Commercial banks with much higher mandated capital requirements provide much firm buffer against any substantial impacts and likely failure of heavy write off and hence much lower counterpart default risks.

     

    By favouring the low-capital independent investment banks over much larger commercial banks in the non-deposit taking-lending part of the financial markets will only worsen the risk profile for the whole financial market and hence the whole economy.

     

    Volcker's proposals should not be adopted by the administration and the regulators.
    10 Dec 2013, 04:03 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    Any proposal which WILL DECREASE RISK to taxpayers not bailing out these too big to fail banks is a good idea.

     

    don't care if it will lower their profits. what about my and our profits? (ie taxpayers)?
    10 Dec 2013, 05:35 AM Reply Like
  • TBV
    , contributor
    Comments (113) | Send Message
     
    With this proposed illogical Volcker rules, don't expect to have all the near-free current bank services for any longer. No free checking, No ATM, No free mobile banking and etc. Rule of thumb, everything regulators propose to banks which eventually will pass down to customers.
    10 Dec 2013, 05:57 AM Reply Like
  • gwynfryn
    , contributor
    Comments (3886) | Send Message
     
    No such thing as a free lunch; those things are paid for, even if by devious routes.
    10 Dec 2013, 09:05 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (1870) | Send Message
     
    patent news

     

    If you think these proposals decrease risks you need to write less and read more. Read the definition of unintended consequences.
    and then the history of Volcker's actions in the 1980's at the Fed.
    Read about the 82 recession.
    Dodd Frank cemented the big banks hold on the industry. I happen to want to scale back the reach of the big banks in a reasonable way.
    If you close down the interstate higways to stop speeders all you get is more dangerous local roads.
    10 Dec 2013, 09:09 AM Reply Like
  • jhawkinstx
    , contributor
    Comments (73) | Send Message
     
    If you are in the same camp as most of the media and see the JPM London whale trade as proprietary trading, when in reality it was a hedge against EU debt default to protect the bank, then you will most likely be disappointed with the volcker rule part of FranknDodd.
    10 Dec 2013, 11:08 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (1870) | Send Message
     
    jhawkinstx

     

    I did risk management back in the 1990's, there is no way you put that kind of quantity into a block trade. Diversification is how you hedge. You might want to look into another blunder, the commercial paper issued by GE CAPITAL in 2008. Have you read the exemptions in the Volcker rule? They are so ambiguous that the lawyers will drive 18 wheeler though it.
    To appease the peasant class they have the CEO sign a piece of paper, just like they have a piece of paper signed under Sarbanes Oxley and how has that worked for us? Having worked in the industry for 35 years,
    some of the regulators are great and the system needs them and some come to the office with their seeing eye dogs. Every time a see a replay of Jim Cramer's rant of THEY NO NOTHING I always think of the CFTC.
    11 Dec 2013, 09:26 AM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (1890) | Send Message
     
    Do I like big banks? NO! Do I like big governments? NO! Do I like manipulation or other forms or market interruptions? NO!
    But unfortunately, we NEED big banks to survive financially. In this huge interconnected world. Big banks are the way to get things done.
    Go to your local savings and loan and see if they can help the USA build an aircraft carrier, or a new suspension bridge across Chesapeake Bay. Find a little bank that can help fund our defense or NASA. Don't allow Government any more power than they absolutely need to do what we hired them to do, and what the Constitution asks for and allows.
    Capt. Brian
    The Lost Navigator
    10 Dec 2013, 11:34 AM Reply Like
  • jhawkinstx
    , contributor
    Comments (73) | Send Message
     
    The sickest thing about this rule is that the only reason it made it into final legislation was because former Arkansas senator Blanche Lincoln needed to look tough on banks into the 2010 primaries after a career of being friendly toward them. All her dem. cohorts backed it for her. The saddest thug was that she almost lost in the primary days before the Volker rule was put into the bill. If she had lost it would have gone away. She went on to get slaughtered in the general election.......I find it rather bizarre that the media is fluffing up its finalization like its something new an horrific for banks.....most of the big guys already shutdown these ops several cycles ago.
    10 Dec 2013, 11:04 PM Reply Like
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