But Fed Governor Lael Brainard, the last remaining Fed Board member nominated to her current job by President Barack Obama, opposed the move, saying it could weaken the post-crisis safety net and encourage the kind of risk-taking the Volcker Rule was meant to prevent.
“I am concerned that several of the proposed changes will weaken core protections in the Volcker Rule and enable banking firms again to engage in high-risk activities,” Ms. Brainard said in her dissent. “The proposal opens the door for firms to invest without limit in venture capital funds and credit funds.”
Regulators tapped by President Trump have been steadily chipping away at post-crisis banking rules. This would mark the second set of changes to the Volcker Rule, named for the late Paul Volcker, the former Fed chairman who championed it. While the adjustments have been carefully researched and are often subtle, they generally cut in one direction: bank-friendly.
“These actions, particularly the Volcker covered funds proposal, are clearly helpful to big banks,” Ian Katz, an analyst at Capital Alpha Partners, said in a note.
The newly proposed tweaks were couched by regulators as minor, and even as responsive to Congress.
In a staff memo, regulators explained that “during congressional consideration of the Volcker Rule, several members of Congress expressed support for excluding venture capital funds” from the restrictions, specifically referencing comments by Representative Anna Eshoo, a California Democrat, and three retired senators, including Chris Dodd, a Democrat and one of the lawmakers for whom Dodd-Frank is named.
Article source: https://www.nytimes.com/2020/01/30/business/economy/volcker-rule-banks-venture-capital.html?emc=rss&partner=rss
Speak Your Mind
You must be logged in to post a comment.