The Volcker Rule Resources

The Volcker Rule bans proprietary trading, and certain investments by banks to limit and regulate the amount of risk they can take on.  Proprietary trading occurs when a financial firm uses its own funds to trade financial instruments, such as stocks and currencies for profit and to establish an inventory that enables faster transactions for clients.  However, “proprietary trading” is an ambiguous term, that even Chairman Paul Volcker, the rule’s namesake, could not define. With the passage of Dodd-Frank, banks have already been unwinding their prop trading operations, but the proposed rules create a complicated and burdensome compliance system that calls into question any trading undertaken by a bank. The ambiguity of, and implementation issues surrounding the Volcker Rule are likely to have a chilling effect on many legitimate services that banks provide to their clients.  This is not a “Wall Street” issue. 

 

If implemented in its current form, the Volcker Rule will have wide-ranging adverse impacts upon regional and medium-sized banks with severe repercussions on the ability of main street businesses to raise capital in order to expand and create jobs. 

 

The Volcker Rule will…  

• reduce the ability of main street businesses to raise capital
• result in higher costs for borrowers 
• force higher bank fees for consumers and businesses
• change long-standing business models of banks to act as market makers to the detriment of clients and investors
• restrict trading in proper and allowable business
• bar mid-size and small cap companies from some debt markets
• place American firms at a competitive disadvantage  
• force some non-financial companies to develop and establish compliance programs