"Volcker Rule" Looks To Include Non-Banks
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The White House has made a push to limit or potentially ban risky trading activities and limit the size of financial companies with the proposed "Volcker Rule," but the administration is now looking to expand the restrictions to companies that do not own bank subsidiaries, according to reports from the Wall Street Journal.
The proposal, named by President Barack Obama after the former Federal Reserve Chairman Paul Volcker, is designed to put a stop to the risk and size at financial companies that could put the overall economy in jeopardy.
In other words the White House was looking to prevent companies with federally insured deposits from proprietary trading or from taking trading risks with the company’s own money. The administration sees this type of activity as having the potential to cause another financial crisis.
The new proposal to be released on Wednesday will detail the Administration's plans to bring more scrutiny to any major financial institution that engages in proprietary trading, even firms those that are not banks.
Under the proposed rule, companies would see tougher capital and liquidity restrictions and would be obligated to provide more data on trading practices to the market.
The rule will make it more difficult for companies to, including large banks and other financial firms to grow.
"Moreover, any financial firm that is identified for heightened supervision under the Administration's regulatory reform proposal would be subject to additional capital and quantitative limits on these activities," the White House summary stated.
This means that even if companies like Goldman Sachs (NYSE: GS) shed banking subsidiaries, they could still face regulatory scrutiny.
The proposal adds that banks would be prohibited from investing or sponsoring private-equity firms and hedge funds.
The Senate lawmakers are currently in discussions to give more discretion to regulators to enforce restrictions on bank size and risk taking. The Volcker Rule has struggled to gain traction and is expected to be watered down by lawmakers.
Other related stocks:
JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C), Wells Fargo (NYSE: WFC), and Morgan Stanley (NYSE: MS).
The proposal, named by President Barack Obama after the former Federal Reserve Chairman Paul Volcker, is designed to put a stop to the risk and size at financial companies that could put the overall economy in jeopardy.
In other words the White House was looking to prevent companies with federally insured deposits from proprietary trading or from taking trading risks with the company’s own money. The administration sees this type of activity as having the potential to cause another financial crisis.
The new proposal to be released on Wednesday will detail the Administration's plans to bring more scrutiny to any major financial institution that engages in proprietary trading, even firms those that are not banks.
Under the proposed rule, companies would see tougher capital and liquidity restrictions and would be obligated to provide more data on trading practices to the market.
The rule will make it more difficult for companies to, including large banks and other financial firms to grow.
"Moreover, any financial firm that is identified for heightened supervision under the Administration's regulatory reform proposal would be subject to additional capital and quantitative limits on these activities," the White House summary stated.
This means that even if companies like Goldman Sachs (NYSE: GS) shed banking subsidiaries, they could still face regulatory scrutiny.
The proposal adds that banks would be prohibited from investing or sponsoring private-equity firms and hedge funds.
The Senate lawmakers are currently in discussions to give more discretion to regulators to enforce restrictions on bank size and risk taking. The Volcker Rule has struggled to gain traction and is expected to be watered down by lawmakers.
Other related stocks:
JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C), Wells Fargo (NYSE: WFC), and Morgan Stanley (NYSE: MS).
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