Financial Reform: Overview of the Volcker Rule (CRS Report for Congress)
| Release Date |
July 9, 2018 |
| Report Number |
IF10923 |
| Report Type |
In Focus |
| Authors |
Rena S. Miller |
| Source Agency |
Congressional Research Service |
Summary:
Legislators and regulators have long grappled with whether
restricting the types of activities banks can engage in, or
reforming banks’ structures, might reduce the risk of large
bank failures and the risk of systemic financial instability,
such as that seen in the 2008 financial crisis. The Volcker
Rule is an example of a means of addressing this issue.
The statutory basis of the Volcker Rule is Section 619 of
the Dodd-Frank Act, enacted in 2010 following the crisis. It
was conceived of by Paul Volcker, a former Federal
Reserve (Fed) chair, and implemented as “the Volcker
Rule” in a 2013 joint final rule by five financial regulators:
the Fed, Federal Deposit Insurance Corporation (FDIC),
Office of the Comptroller of the Currency (OCC),
Securities and Exchange Commission (SEC), and
Commodity Futures Trading Commission (CFTC).
The Volcker Rule generally prohibits a depository bank (or
company that owns one) from engaging in proprietary
trading or investing in (or sponsoring) a hedge fund or
private equity fund. The rule has been subject to debate and
was recently amended through legislative action.
Regulators have also proposed further changes to the rule.
