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.
About the Author
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.