The Federal Reserve on Wednesday announced a series of changes to Obama-era banking regulations intended to prevent banks from taking unnecessary risks with their clients’ money. The move will free smaller financial institutions from onerous federal rules and allow regulators to focus their attention on bigger banks that take greater risks.
The changes to the so-called Volcker Rule—named for former Federal Reserve Chairman Paul Volcker, who suggested the basic premise behind what eventually become a 700-plus page regulation included as part of the Dodd-Frank Act—were quickly criticized for supposedly bringing the entire financial system back to the precipice of 2008.
“This proposal is no minor set of technical tweaks to the Volcker Rule, but an attempt to unravel fundamental elements of the response to the 2008 financial crisis, when banks financed their gambling with taxpayer-insured deposits,” Marcus Stanley, policy director at Americans for Financial Reform, told The New York Times. “If implemented, these proposals could turn the Volcker Rule into a dead letter, a regulation that would not meaningfully restrict trading activities at the banks whose problems could drag down the entire financial system—again.”
Read the rest at Reason.com.
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