There will be Loopholes

I’ve chosen the ever popular Volker Rule to write about for my final paper. For those of you who don’t know this controversial piece of legislation is attached to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Essentially, what it does is take away proprietary trading desks for major banks. These desks are huge money makers for banks like Goldman Sachs and Morgan Stanley because instead of trading their clients’ money, they are trading their own money. They are basically making themselves money without thinking about their main clients. 

In a time when the fate of Wall Street and banking is amidst debate, the Volker Rule is one of the most important clauses of Dodd-Frank. In a time when Wall Street is also dealing with backlash from the “99%”, the Volker Rule is of the utmost importance. This piece of legislation is going to hit banks where it hurts, their revenues. Some banks like Goldman and MS will be hit hard by this reform due to a big chunk of their revenue coming from their proprietary desks.

I have taken a stance on this issue being that this reform will be a good thing for the future of Wall Street. Banks will not be taking on as much risk, which means there will be less of a risk for another catastrophic event, like what happened in 2007. They will be able to approach their business in a more stakeholder driven model, which before might not have been the case. However, I wish to show how political influence and lobbying has driven this bill into a heated debate. It’s become a bill that is riddled with ulterior motives from lawmakers who care more about having the support of Wall Street. Ultimately, the fight against both sides of the issue is being drawn out and the bill continues to be edited and redrafted. My take on this bill is that it’s going to end up once again in the favor of Wall Street. There will loopholes.

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4 Responses to There will be Loopholes

  1. ALXLIONS says:

    I can imagine this bill will have a huge effect on the number of jobs offered and the ways these banks are structured if its passed. I know there are many proprietary trading desks for major banks and if you take that away, where will all those employees go? I agree with that megan that this bill will make the banks value their stakeholders more which is a good thing in my opinion.

  2. mike cardinute says:

    So the point of all this is to stop speculative investments that do no affect the customers. One thing I would like to note is that Wall Street finds a way around everything. I do not know how, but I know it happens. This rule might sound good on paper, but I feel that they are bound to exploit the potential loopholes that will be present in this piece of legislation. I read some articles about this rule and noticed all the exemptions that banks have to this legislation.

  3. MDHarbin says:

    I find your last sentence interesting (I assume its a typo?). But if you don’t mind I’d like to use a homonym and change your punctuation to agree with you. Their will: LOOPHOLES! Wall Street is always after the fast buck and will do anything to work around any new regulations, it has happened in the past and it will happen again. Its the capitalist mentality to the nth degree.

  4. Pingback: Best of Blog Week 8 | Biz Gov Soc

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