News Release: Federal Reserve Rendering Volcker Rule on Speculative Trading “Close to Useless”


Jan. 30, 2018

Carter Dougherty
(202) 251-6700

Federal Reserve Rendering Volcker Rule “Close to Useless”

“The Federal Reserve has, quite simply, taken a wrecking ball to the Volcker Rule, one of the critical elements of post-crisis financial reforms,” said Marcus Stanley, policy director at Americans for Financial Reform Education Fund. “The changes made over the past six months have rendered the rule close to useless, at a time when big-bank profits have soared to new highs and risks to financial stability have risen. The Fed today significantly loosened existing Volcker Rule restrictions by engineering multiple, entirely new carveouts that would allow banks to re-create some of the worst pre-crisis abuses.”

“Policymakers will need to go back to the drawing board and create new safeguards to protect the public against Wall Street recklessness and greed, and a repeat of 2008.”


In August regulators issued a rule that dramatically weakened the Volcker Rule limits on direct proprietary trading by banks. Today, they have proposed new changes that would greatly weaken restrictions on banks taking risks through ownership of external funds, including venture capital funds and securitization vehicles like collateralized debt obligations.

This AFR-EF white paper on the Volcker Rule from October 2018, before the recent changes were made, is an additional resource.