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October 27, 2011 at 07:12 AM
Lobbying efforts notwithstanding, the Volcker Rule is still effective, according to no less an authority than Paul Volcker, for whom it was named.
He said as much when asked about changes made to the rule since its original proposal in an interview with Charlie Rose on Monday. Intense lobbying has brought changes to the rule, and many have voiced concern over it, including banks, who believe that it is too complicated, and advocates, who believe that it is no longer effective.
The Volcker Rule, according to the Treasury Department, is a segment of the Dodd-Frank law “that prohibits banking entities that benefit from government protections—such as FDIC insurance on customer deposits or access to the Federal Reserve discount window—from engaging in proprietary trading and from certain relationships with hedge funds and private equity funds.”
Mandated under Section 619 of the Dodd-Frank act, the rule was SEC Chairman Mary Schapiro said Wednesday that the Volcker rule’s “implementation would be a step forward in reducing conflicts of interests between the self-interests of banking entities and the interests of their customers.” The statute, she said, “is aimed at constraining banking entities’ proprietary trading, protecting the provision of essential financial services and promoting the stability of the U.S. financial system.”
Banks have protested that the rule would hurt business and make it impossible for them to grow, but Volcker contradicted that view emphatically on Rose’s show. Rather, he said, it is “supportive of orderly economic growth; there is no question at all in my mind” about it. The rule persists, he said, if in somewhat more complicated a form than its original state, but even as it is, said Volcker, “I think it is OK.”
