Bank/Thrift Supervision   |    Capital    |    CFPB    |    Deposit Insurance    |    Interchange    |    Mortgage Finance
Municipal Advisors   |    OCC-OTS Merger   |    Preemption    |    QM - QRM    |    Swaps   |    Volcker Rule    |    Full Topics List
Qualified Mortgage - Qualified Residential Mortgage
Consumer Financial Protection Bureau - CFPB
Bank/Thrift Holding Company Supervision
Deposit Insurance
Mortgage Finance
Municipal Advisors
OCC-OTS Merger
Volcker Rule
Corporate Governance
Financial Stability Oversight Council (FSOC)
Office of Financial Research (OFR)
Systemic Risk
Supervision and Oversight
Payment, Clearing and Settlement
Prudential Supervision
Trust & Securities
Asset-Backed Securities
Resolution Authority

Wednesday, April 11, 2012

AEI Wallison on the Volcker Rule

AEI's Peter J. Wallison wrote in an article to the Wall Street Journal regarding the flaws of the Volcker Rule.
The regulation is almost 300 pages and contains over 1,000 separate questions for banks and their associates. That's not because the regulators delight in abusing the regulated, but because the regulators are grappling with an impossible problem-how to prohibit proprietary bond trading while preserving bank activities that are vital to the health of the capital markets. ... [I]n making markets, a bank is clearly trading for its own account. Moreover, bank bond trading adds vital liquidity to these markets-without it, the spreads between bids and asks would be much wider ... Banks will stop their activities if their compliance with regulations isn't assured. .. So why is proprietary trading by banks now to be prohibited? Although Dodd-Frank was intended to prevent future financial crises, no one has yet been able to point to bank proprietary trading as a factor in weakening the banks before the 2008 financial panic.

Read the full story in the Twitter feed on the right of the homepage of the Dodd-Frank Tracker.

No comments:

Post a Comment

Please read our comment policy before making a comment.