The Economic Impact of the Volcker Rule

Wednesday, December 11, 2013

Former Federal Reserve Board Chairman Paul Volcker testifies during a hearing before a Senate committee. May 9, 2012 (Alex Wong/Getty)

Former Federal Reserve Chaiman Paul Volcker became a leading advocate for financial reform in the wake of the Great Recession. Volcker, now 86-years-old, pushed President Barack Obama to regulate the commercial activity of banks, limiting an institution's ability to make proprietary trades and invest in hedge funds. 

This week, financial regulatory agencies officially approved the rule named for the former Fed Chair, which passed as the centerpiece of the Dodd-Frank Act in June 2010.

While the final iteration of the Volcker Rule does limit a bank's ability to invest in hedge funds and proprietary trading, the banks will continue to monitor their own trades—essentially policing themselves. 

Kathryn Wylde, Deputy Chair of the Board of the Federal Reserve of New York and President of the Partnership for New York City, compares the final Volcker Rule to what Paul Volcker originally devised, and describes how the rule might influence the U.S.'s economic future. 


Kathryn Wylde

Produced by:

Jillian Weinberger


T.J. Raphael

Comments [4]


Why are banks into hedge funds anyway? It's much bigger deal ~ than stealing cookies ~ It's like gambling against your bad business practice and hoping that you've done your worst.

I'd agree with the statement about bankers being prosecuted. At least they need their reputations put in doubt, also associates who go along with dubious practices. Hopefully, someone is watching, and scrutinizing corrupt individuals.

There's so much lobbying on behalf of investment bankers, it's no wonder why no one has to answer for wrong doing. 900 pages of regulations is ridiculous! Lawyers must have enough double talk in that to let greed triumph. Pessimistic . . . look at all the people who let Bernie Madoff's corruption go on - anyone with half a brain in their head should have understood his practice was not kosher. Greedy, greedy, greedy - Don't call a pig a pig.

Dec. 12 2013 09:08 AM

Who pays with even more fees to pay for these huge new compliance departments. The consumer gets screwed again under the guise of helping. When the government says I am here to help - bend over.

Dec. 11 2013 01:39 PM
Larry Fisher from Brooklyn, N.Y.

"O.K. Johnny, while mommy is at the store, your job is to count how many cookies are in the cookie jar, cause I don't know, and then you are to watch them and make sure nobody eats any."
-The Volcker Rule

Dec. 11 2013 01:13 PM

banks and compliance? ahahahaha

doesn't she realize these people F us over and over, nothing will change until they start going to prison for their actions.

Dec. 11 2013 09:12 AM

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