The Volcker Rule Has Already Worked

Urging journalists to stop arguing about whether the Volcker Rule is working, Kevin Roose claims that it “already has worked.”

“The goal of the Volcker Rule was never to eliminate risky trading altogether. It was to eliminate the most blatant types of prop trading, and make it easier to examine the other types of trading for evidence of prop-ness.”

“If [a bank] wants to wander into the gray area between prop-trading and market-making (buying assets, holding them until a seller can be found, and pocketing any price appreciation in the meantime), it will just have to justify why it did the trade that way.”

“But the Volcker Rule was never meant to decide those case-by-case judgments. It’s just the mechanism that forces big-bank traders to enter the decision matrix.”

“So while Volcker Rule supporters can hope for tough enforcement in the future, they should be happy with what’s already happened.”

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  • mea_mark

    It will certainly slow down wild speculation. Big banks really don’t like people looking into their affairs and transactions. Now if it looks like someone is doing something they shouldn’t be doing, an investigation can ensue.

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