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In a major victory for the big banks and US Wall Street regulators, the "Volcker Rule" has been eliminated.
US banking regulators approved Tuesday amendments to ease a rule introduced after the 2007-2009 financial crisis that prohibits banks to negotiate on their own behalf, giving Wall Street one of its biggest successes under the US. Trump administration. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have approved the revamped version of the so-called "Volcker Rule", which seeks to prohibit lenders who accept deposits insured by US taxpayers trade .
The amendments, first proposed in May 2018, followed years of lobbying from banks including Goldman Sachs Group Inc. (GS.N) and JPMorgan Chase. & Co (JPM.N) and Morgan Stanley (MS.N), who have long complained that the rule is too vague and complex.
FDIC commissioner Democrat Martin Gruenberg, who supported the proposed Volcker rewrite in May 2018, voted against the final settlement Tuesday, saying it would "effectively cancel" the protections of the rule. The other three FDIC board members, all Republicans, voted for.
"Trump's regulators continue to open a Pandora's box of risky trading and speculation at the expense of US taxpayers," said Senator Sherrod Brown, the Senate's most Democrat Senate Banking Committee, in a statement.
Analysts believe the final rule, which differs significantly from the proposed 2018 version, may also be vulnerable to court challenges. The final rule removes this proposal for Wall Street corporations, but simplifies the initial test and applies it only to much smaller banks.. At the same time, rewriting simplifies a separate part of the rule, making it easier for banks to invest in hedge funds or private equity funds.
Details Scant
The details presented are meager and I have no doubt that the regulations were exaggerated.
In general, I am against regulation unless the purpose is to prevent fraud and misuse of client funds.
I am also against the FDIC, but I am in favor of 100% reserves on customer deposits, which would completely eliminate debt.
Go ahead, delete the rules, but replace them with an even simpler rule, requiring 100% reserves and no leverage.
Just in time
With a recession and overvalued stocks beyond belief, banks can once again negotiate with their clients and invest in hedge funds.
Wait a second, only the big banks.
It was a complete victory for the big banks, against the customers.
Mike "Mish" Shedlock
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