After the failed attempt by banks to defeat the provision of the Financial Regulation Bill, which prohibits banks which are federally insure to trade using their own accounts, bankers everywhere are switching their attention elsewhere.
Bankers have all but given up on defeating one of the most contentious provisions in the financial regulation bill — one that would effectively bar federally insured banks from trading for their own accounts — and are now focusing on battles like heading off a prohibition on derivatives trading.
The bill which is soon to reach the House has imposed stricter regulation than it had initially proposed as Senate members prepare to send the bill to the President. The passing of the bill will be a victory for the Government and for those who advocated the bill especially the former Federal Reserve chairman, Paul A. Volcker.
With the Volcker Rule soon to be made a law the move has received lot of criticism and has seen support from many.
The collapse of the market in 2008 lead to banks being prohibited from trading derivatives by the bill encouraged by Democrat of Arkansas, Senator Blanche Lincoln.
Mrs. Lincoln took in consideration the concerns voiced by the Wall Street and amended her bill to better suit their needs, experts at Wall Street are still unhappy with the changes made. The amendments give banks two years to get rid of their derivatives or they can maintain their derivatives under a separate account which will not be a part of the bank itself.
“Every banker I speak with knows very well what ‘proprietary trading’ means and implies,” Mr. Volcker said.