Big Banks Win Again: Volcker Rule Gutted


Regulators stripped down rules put in place following the Great Financial Crisis that restricted speculation.

In a major win for big banks and Wall Street U.S. Regulators Gut the 'Volcker Rule'.

U.S. banking regulators on Tuesday approved changes easing a rule introduced after the 2007-2009 financial crisis that bans banks from trading on their own account, giving Wall Street one of its biggest wins under the Trump administration. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) approved the revamped version of the so-called “Volcker Rule,” which aims to ban lenders that accept U.S. taxpayer-insured deposits from engaging in proprietary trading.

The changes, first proposed in May 2018, followed years of lobbying by banks, including Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Morgan Stanley (MS.N), which have long complained the rule is too vague and complex.

FDIC commissioner Martin Gruenberg, a Democrat who backed the Volcker rewrite proposed in May 2018, voted against the final rule Tuesday, saying it would “effectively undo” the rule’s protections. The other three FDIC board members, all Republicans, voted in favor.

“Trump regulators continue to open a Pandora’s box of risky trading and speculation at the expense of American taxpayers,” Senator Sherrod Brown, the top Democrat on the Senate Banking Committee, said in a statement.

Analysts say the final rule, which is significantly different from the proposed 2018 version, could also be vulnerable to legal challenges. The final rule scraps that proposal for large Wall Street firms, instead simplifying the original test and only applying it to much smaller banks. At the same time, the rewrite simplifies a separate part of the rule which makes it easier for banks to invest in hedge funds or private equity funds.

Details Scant

The details presented are scant and I don't doubt that regulation may have been overdone.

In general, I am against regulation except where the purpose is to prevent fraud and misuse of client funds.

I am also against FDIC but I am in favor of 100% reserves on customer deposits which would eliminate leverage totally.

So go ahead and scrap the rules but replace them with an even simpler rule demanding 100% reserves and no leverage.

Just in the Nick of Time

With a recession at hand and stocks overvalued beyond belief, banks can once again trade against their customers and invest in hedge funds.

Wait a second, only big banks.

It was a complete victory for the big banks, against customers.

Mike "Mish" Shedlock

Comments (47)
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I also support the 100% reserve requirement.

Will it happen? Never. Too much short term pain is required which will come out at the ballot box.

However, my wife's grandfather lost 300k from bank failures during the 2007-08 crisis. Yes, he had too much in one account, but in a world that doesn't have fractional reserve lending, it wouldn't matter. FDIC insurance is only needed when irresponsible banks lend irresponsibly.


Without leverage loans would grind to a halt. Giving out a loan with good collateral is generally a safe bet and I would hate to see the economic ice age that would result if no leverage by the banks was allowed


Trump scores again! It will take decades to fix all the damage he has done once we get rid of him.


The Dow Drops By: bob | 2019/08/14

This is what happens when you put an amateur behind the wheel.

Government is a professional job, and Hillary Clinton was demonized by the right for thirty years to the point where she could not win the election.

Oh, don’t tell me how she won the popular vote, don’t even tell me about Russian intervention, the truth is she lost. Democrats play by the rules, Republicans know that rules should be broken. And for all you on the straight and narrow, ever notice that the tech titans, almost all Democrats, break the rules on a consistent basis? Wasn’t that the mantra of Facebook, “move fast and break things”? And today’s paper says that Facebook was transcribing audio, it hired outside people to do it…didn’t anybody know this was wrong? That’s like saying if I hire someone else to kill my wife, it’s not my fault. The techies play offense, and then apologize when they get caught crossing the line.

The Republicans define the game.

Forget the Trump base COMPLETELY!



They serve man.