AS US lawmakers hammered out a final financial regulation bill, controversy emerged last night over the proposed “Volcker rule” that would bar banks from the risky private equity and hedge fund businesses.
White House economic adviser Paul Volcker, in a letter, said he firmly opposed giving banks that make only small investments in hedge funds or private equity funds any exemption from his proposed ban.
The letter from Volcker to Senate Banking Committee chairman Christopher Dodd emerged as Capitol Hill negotiations intensified.
“I absolutely oppose any such modification” of the US Senate’s Wall Street reform bill, Volcker said in the 17 May letter to Dodd.
The Volcker rule, widely seen by analysts as eventually becoming law, threatens to reduce trading profits at big banks, which have fought for months to kill or weaken it.
City A.M. Reporter