Contact Us Disclosures Blog
 
Make an Appointment Contact Us Podcast Blog
Market Commentary Audio Archives Book Shelf InvestAbility Center

The Volcker Rule

November 5, 2012 – 5:49 pm

The Financial Reform Act with the Volcker Rule passed well over a year ago and still we have no guidelines for the banks to follow. The Volcker Rule prohibits banks from trading stocks and derivatives with their own money.

SEC Chairman Mary Schapiro stated that, “there are a lot of issues to work through.” Besides the SEC there are four other regulators involved. They have so far produced a 300 page proposal and 18,000 comment letters have arrived concerning the rules in that document. There is no deadline for when this process will be completed.

That 300 pages concerns the Volcker Rule. What about the rest of the Financial Reform Act? There shouldn’t be any surprise that the banking industry is not in a hurry to lend money. They don’t know the new rules: no one does, and it does not look like they will know for some time. At the same time bankers are fully aware that the rules are going to be restrictive. Would you, running a business, be conservative with your resources if the regulations you operate under will be changing next year?

Banking is a big part of our economy. Lending and the flow of money is the oil that makes things run smoothly in the economic engine. This is the very reason Bernanke has been pouring cash in to the system. It would help if regulators would finish their work so banks can be part of the growth story.

Good Trading
Steve Peasley

Post a Comment