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Reply #11: Volcker takes aim at long-term investments [View All]

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Pale Blue Dot Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-20-11 07:58 AM
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11. Volcker takes aim at long-term investments
Edited on Thu Jan-20-11 07:58 AM by Pale Blue Dot
Paul Volcker, the former Federal Reserve chairman, is encouraging a crackdown on banks longer-term principal investments as his plan to prohibit short-term proprietary trading comes closer to implementation.

Goldman Sachs investment in Facebook is the sort of deal that could be affected if Mr Volckers call to curb banks longer-term investments is taken up by regulators or Congress. Democratic congressional aides are already examining the issue.

Mr Volcker told the Financial Times that regulators had made a good honest effort to develop his Volcker Rule in a study released on Tuesday. The rule, which became law as part of the Dodd-Frank financial reforms, prohibits banks from trading on their own account or investing in private equity or hedge funds.

But Mr Volcker said he and Congress had perhaps lost sight of longer-term activities, which are considered merchant banking and are authorised under banking rules. Potentially what is merchant banking and what is a proprietary trade needs some delineation, I think, he said.

This makes me glad that Volcker's on the outside now...
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