The Volcker Rules For The Volcker Rule

A fundamental principle underscoring the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010¹ ("Dodd-Frank" or the "Act") is the perceived necessity to curb the proprietary trading and other risk-taking activities of banks, and to divest banks of risky assets, including interests in hedge funds and private equity funds. The markets have dubbed this principle the "Volcker Rule" in acknowledgment of the efforts of Paul Volcker, the former chairman of the Federal Reserve System, to promote it.² The Act entrusted five regulatory agencies³ with the task of promulgating rules to transform principle into regulation. Under a barrage of industry comment and criticism,⁴ the final rules have emerged, surprisingly close to the restrictions envisioned in the Dodd-Frank provisions.