Fed proposes easing Volcker rule that limits risky bank trading

The Federal Reserve is proposing to ease a rule aimed at defusing the kind of risk-taking on Wall Street that helped trigger the 2008 financial meltdown.

The Fed under new leadership on Wednesday unveiled proposed changes to the Volcker Rule, which bars banks’ risky trading bets for their own profit with depositors’ money. The high-risk activity is known as proprietary trading.

The proposed changes would match the strictest applications of the rule to banks that do the most trading ā€” 18 banks with at least $10 billion in trading assets and liabilities. They account for 95 percent of all U.S. bank trading and include some foreign banks with U.S. operations, Fed officials said.

Less stringent requirements would apply to banks that do less trading. The idea is to make it easier for banks to comply with the Volcker Rule without sacrificing the banks’ safety and soundness, the officials said.

Source: USA Today

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