Volcker Rule Faces Uphill Battle

Penning an op-ed in the New York Times, former Fed Chair Paul Volcker outlined his rationale for the latest proposed regulations from the Obama administration, namely that large financial firms shouldn’t engage in proprietary trading nor own hedge funds. According to Marketwatch, after Volcker testified before the Senate Banking Committee Tuesday in favor of such regulations, big banks pushed back. Goldman Sachs and J.P. Morgan testified that restricting such activities would restrict credit and raise the costs of capital, but wouldn’t lessen systemic risk. While the ranking Republican member of the Senate Banking Committee, Senator Richard Shelby (R-AL) is an outspoken critic of the proposal, Committee Chair Chris Dodd (D-CT) has alternately expressed pessimism and optimism about the regulation’s passage.