The Volcker Rule

by astanhaus

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“The Volcker Rule.”

This is a key term to know ladies—especially if you are dating any sort of banker.

Remember the now-defunct Glass-Steagall Act and how it separated commercial and investment banks?

The Volcker Rule (tucked into Dodd-Frank) is trying to separate these two types of banking yet again! Never again should a commercial bank take on too much risk and gamble away its deposits à la 2008. Therefore, commercial banks must limit their use of proprietary trading and sponsoring private equity firms or hedge funds (and their excessively risky behavior).

The Volcker rule returns us to the classic definitions of a commercial bank vs. investment bank.

If you want a detailed play-by-play, here is a well-done New Yorker article.

Oh and if you are dating a banker, please note he will most likely not be a fan of The Volcker Rule.  Proceed with caution.  But at least you’ll understand what he’s complaining about next time!

(Originally published on Amanda Stanhaus’s financial literacy blog XO, Bettie.)

 

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