Volcker Reportedly Unhappy With Rule That Bears His Name
Not happy. Tim Sloan/AFP hide caption
Former Fed Chair Paul Volcker, who pushed a rule in the new financial regulations to keep banks from investing anything in "speculative instruments," is unhappy with the final compromise that leaves the door open a crack, according to Bloomberg.
The clarity Volcker had hoped for in the rule was negotiated away as Congress agreed to limit banks to invest no more than 3 percent of their capital in hedge funds and private equity funds.
Bloomberg's Yalman Onaran reports:
Volcker ... didn’t expect the proposal to be diluted so much, said a person with knowledge of his views.
... “The Volcker rule started out as a hard-and-fast rule on risky trades and investments,” said Anthony Sanders, a finance professor at George Mason University School of Management in Fairfax, Virginia. “But through negotiations, it was weakened and ended up with many loopholes.”
In a statement earlier this week, Volcker made all the right noises, at least officially. He said the bill agreed in Congress "provides a constructive legal framework for reform of the financial system."