Regulators set to approve tougher Volcker Rule

Four of five regulatory agencies tasked with reining in risky trading practices at banks are expected to approve a bolstered version of the so-called Volcker Rule next week, The Wall Street Journal reports.

A fifth agency with jurisdiction over the matter – the Securities and Exchange Commission – will likely follow suit with a vote soon after, according to the newspaper.


Named for former Federal Reserve chairman Paul Volcker, the rule would prohibit banks that get federal backing from engaging in risky speculative trading practices.

The regulation, among hundreds required by the Dodd-Frank financial reform law, is designed to keep financial institutions from gambling with taxpayer money – a practice that helped cause the 2008 economic crisis.

However, the rule has been plagued with delays, which are complicated by the number of regulatory agencies working on the rule.

Volcker himself has complained that there were too many regulatory agencies crafting the delayed Dodd-Frank rules, creating “a recipe for indecision, neglect and stalemate.”

The latest version of the Volcker Rule includes tougher restrictions than had been planned just weeks ago.

“Under the final rule, regulators are expected to closely track trading activities with an eye on whether certain trades known as hedges are designed to post a profit rather than offset risks that accompany trading with clients,” according to the Journal’s Scott Patterson, who reviewed a portion of the rule.

More from the Wall Street Journal here.