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Volcker Rule should bring some order to financial reform 

December 13, 2013
Editorial Board, Washington Post

Enacted in 2010 as part of the Dodd-Frank financial regulation law, the Volcker Rule had a clear purpose: Prevent large, federally insured banks from speculating in the financial markets. Named for its leading advocate, former Federal Reserve chairman Paul A. Volcker, the rule was supposed to help reestablish a line between commercial banks, which would collect deposits and make loans, and hedge funds, private equity companies and investment banks, which would take risks without any federal safety net. Keeping banks out of the speculation business would eliminate a source of system instability and taxpayer risk.

The problem has been how to distinguish speculative activities, known as “proprietary trading,” from activities Congress wants to permit, such as “market-making,” in which banks buy and sell securities as a service to clients, and hedging, in which banks purchase securities to offset risks elsewhere in their holdings. 

Read more: Washington Post

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