WASHINGTON–As the country marks one decade since the lowest points of the Great Recession, the nation’s biggest banks are getting a reprieve on a post-crisis rule that was aimed at stemming risky behavior.
Federal bank regulators have now unveiled a sweeping proposal to soften the Volcker Rule, a critical piece of 2010’s Dodd-Frank Act that was enacted with a goal of reining in risky trading. Under the relaxed rules, Wall Street banks would have more freedom to once again make their own complex bets–bets that can be highly profitable, but also make them vulnerable.
The Federal Reserve said it plans to ease up on several parts of the rule, while four other regulators are expected to soon follow suit. Once the proposals are in place around the Volcker Rule, a comment period of 60 days is expected.
The proposed loosening of the rules follows President Trump’s signature on legislation that also provides regulatory relief to credit unions and banks, as CUToday.info has reported.
“Regulators said on Wednesday that the primary intent of the Volcker Rule would remain intact and that banks would not be allowed to return to the wild days of proprietary trading, when traders made big bets with the bank’s money and sometimes lost huge sums,” the New York Times said in its analysis. “But they said the rule needed to be simplified so that banks could more easily comply with it and Washington could adequately enforce it.”