The Dodd-Frank Wall Street Reform and Consumer Protection Act still includes a watered-down version of the Volcker Rule and the Lincoln Amendment, both of which seek to limit deposit-taking banks’ engagement in riskier activities, often involving derivatives, such as proprietary trading and swap dealing.
(Click here for the complete text of the Act. Section 619 starts on page 660, Section 716 on page 734.)
The Volcker Rule, originally formulated by former Federal Reserve chairman Paul Volcker last year, is the idea that deposit-taking banks should be forbidden from proprietary trading, or investing in hedge funds or private equity funds.
In the form in which it appears in Section 619 of this Act, the Rule is expressed in an extremely convoluted way over 30 pages, with many exceptions and exceptions to exceptions. It is likely to take a long time before lawyers and regulators arrive at a working understanding of...