Regulators released a proposal on Oct. 11 known as the Volcker Rule, which is aimed at overhauling how the banking industry carries out its trading activity. The proposal, spanning about 300 pages, includes provisions that scrutinize how banks collect revenue, award compensation and track their compliance with the Volcker Rule.
According to financial industry lawyers and lobbyists these will challenge the very nature of Wall Street.
1. What is the Volcker Rule? Specifically, explain the revenue provision focus. Do you think this regulation is needed? Why or why not?
2. The proposal spells out an expansive internal control regime that banks must adopt, creating layers of expensive and time-consuming compliance. Can too much internal control be a bad thing? Discuss in general.
3. Do you agree with Sullivan & Cromwell, who say: “The combined effect of these conditions could have a highly adverse impact not only on foreign banks, but on the position of the United States as a financial center.” Why or why not?
Protess, B. (2011) With Volcker Rule, Wall Street Braces for Change, The New York Times, Oct. 11(Retrievable online at http://dealbook.nytimes.com/2011/10/11/with-volcker-rule-wall-street-braces-for-change/?ref=business)