Financial Stability News

News about financial stability, central banking and theory of money

Volcker rules issued today

The long-awaited proposal for how the Volcker rule will be implemented was finally issued today. In parallel statements from the Federal Reserve and FDIC, the proposal is put forward for public comments up to mid January 2012. The rules will be implemented from July 2012. The document is a hefty 298 pages long, and contain 383 (!) questions. As one interest group noted, this …” indicate the fact that regulators are still in the midst of crafting a final product. Some of the questions they pose show pressures to weaken the rule even further, to the point of total uselessness”. Industry representatives, on the other hand, fears that … “the over-sized nature and complexity of this proposed rule will make it unworkable and will further inhibit US banks ability to serve customers and compete internationally”.  The proposal will surely draw fire from all corners during the hearing period. The big question is if it will have a noticeable effect of the volume of proprietary trading and contribute to a safer and more stable financial system. One congressman think the current proposal may in fact undermine the intention of the President and the Congress, i.e. to suppress proprietary trading. He quotes Obama, when he first introduced the Volcker rule. It remain to be seen it that spirit carries through to July 2012. :


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