Months after the July 1 deadline to finalize the Volcker Rule—a cornerstone of the Dodd-Frank Act that places limits on proprietary trading by banks and on other activity that regulators consider risky—the provision remains in limbo, leaving open the door for those pitching alternatives and others demanding its demise.
Section 619 of the Dodd-Frank Act, referred to as the Volcker Rule, is intended to lower the level of risk banks can take by prohibiting proprietary trading except for the permissible activities of hedging, market making, and underwriting, and by limiting the ability of banks to own hedge funds and private-equity funds. The idea is that banks with customer deposits insured by the Federal Deposit Insurance Corp. and with access to the Federal Reserve’s discount window shouldn’t be taking risks that endanger the financial system.
