Wall Street loathes change. According to NY Times’ Dealbook that could explain its displeasure with the Volcker Rule. The rule, unveiled by regulators on Tuesday, would overhaul how the banking industry carries out its trading activity. Regulators plan to limit banks from investing in hedge funds while also prohibiting proprietary trading, a major profit center where banks trade with their own money rather than for clients.
In theory, banks can easily cope with most Volcker Rule changes. In fact, they already are doing so. The nation’s biggest banks, like Goldman Sachs and Bank of America, shut down their stand-alone proprietary trading desks once Dodd-Frank became law last year.
But the proposal, which spans some 300 pages, contained a few unfriendly surprises for the banks, including provisions that scrutinize how banks collect revenue, award compensation and track their compliance with the Volcker Rule. Some aspects of the proposal, financial industry lawyers and lobbyists say, challenge the very nature of Wall Street. For one, the rule would prevent banks from doling out bonuses intended to “encourage or reward proprietary risk-taking….”
Read more at http://dealbook.nytimes.com/2011/10/11/with-volcker-rule-wall-street-braces-for-change/
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