‘Spectacular’ Losses = USA Banks

The rule, named after former Federal Reserve Chairman Paul Volcker, was included in the 2010 Dodd-Frank Act in an effort to restrict risky trading at banks that operate with federal guarantees. Five U.S. regulators released the 298-page proposal seeking comment on how it would affect market-making, liquidity, foreign institutions and private equity and hedge fund investments.

Volcker, 84, defended the rule in his own letter yesterday, challenging banks’ arguments that the rule would hurt markets.

“The recent years of financial crisis have seen spectacular trading losses in large commercial and investment banks here and abroad,” Volcker said. “Consequently, the stability of important banks was jeopardized, contributing to a financial crisis of historic dimension.”

The Volcker Rule will push risk outside the US Federal envelope and make it the risk takers problem and not the taxpayers problem....