The “Volker rule” reaches the finish line

By Greg Garvan

At long last, the Federal Deposit Insurance Corp. board and the Federal Reserve unanimously approved the final version of the “Volker rule,” designed to reduce risky investment activity by banks.  Yes, the regulator’s rule/act has gone from 3 pages to 900; and no, it is not fully a redemption of the Glass-Steagall original.  But, folks, this goes a long way towards trying to rebuild faith in our system.  Still, like the newly built dikes in New Orleans after Katrina, one wonders: will it hold?  Will the Volker rule really keep banks from becoming “too big (or mutually interdependent) to fail,” and will we let big banks that go out on shaky limbs actually fail next time? How much did the “Occupy SEC” lawsuit filed earlier this year help move implementation along?  I’m hoping a lot; and overall, this is great news for social impact investors, who want to see faith restored and a longer term sustainable attitude taken by investors and regulators alike.  

Coverage of the new rule:
Washington Post: fairly straightforward summary of rule’s provisions
The Atlantic: Paul Volker Challenged Obama, then Changed Wall Street
The Economist: More Questions than Answers in new Volker Rule
Andrew Sullivan’s typically varied overview from several diverse commentators

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Greg Garvan

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