Volcker Rule Could Impact Credit Card Issuers
Stock prices for some of America's largest credit card issuers suffered major drops this month when President Obama proposed legislation that could limit banks' business activities. While the so-called "Volcker Rule" wouldn't directly impact credit card usage, it could affect some of the other profit centers that offset losses from consumer lending.

According to government officials, the proposal aims to limit the amount of risky equities trading inside many large banks. Banks that participate in government loan initiatives or in federal deposit insurance programs would no longer be able to operate their own, in-house hedge funds.

The Wall Street Journal outlined the potential impact of the Volcker Rule on large credit card issuers. Bank of America and Chase, two of the country's largest issuers of Visa and MasterCard accounts, would feel only a minimal impact from the sale of small trading units. Citibank, however, would be forced to sell or close departments that generate five percent of the company's annual profits. Obama and lawmakers told reporters that such operations, even when profitable, posed too much of a risk to taxpayers' money.

Important Note! The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we can not guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card prior to applying.


About the Author

joe

Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.