The FED’s Christmas Present to Big Banks

December 19, 2014 by  
Filed under Economy

WASHINGTON — Christmas came early for Wall Street this year. The Federal Reserve on Thursday granted banks an extra year to comply with a key provision of the Volcker Rule, a move that gives financial lobbyists more time to kill the new regulation before it goes into effect.

The Volcker Rule is a key element of the 2010 Dodd-Frank financial reform law that bans banks from engaging in proprietary trading — speculative deals that are designed only to benefit the bank itself, rather than its clients. Thursday’s move by the Fed gives banks an additional year to unwind investments in private equity firms, hedge funds and specialty securities projects. The central bank also said it plans to extend the deadline by another 12 months next year, which would give Wall Street a two-year reprieve through the 2016 presidential election.

The Fed’s delay comes less than a week after Congress granted Wall Street a reprieve from another reform that had been mandated by the 2010 Dodd-Frank financial reform law. The measure, known as the swaps push-out rule had eliminated federal subsidies for trading in risky derivatives — the complex contracts at the heart of the 2008 banking meltdown. Bank watchdogs say the Volcker Rule delay adds insult to injury.

“Swaps push-out was a club,” said Marcus Stanley, policy director for Americans for Financial Reform. “This is a stiletto.”

Big banks including Goldman Sachs and Morgan Stanley have billions of dollars invested in private equity firms that they would have to sell at a loss based on current prices, according to a Bloomberg report from early December. Dodd-Frank gave banks four years to unwind their investments in speculative enterprises, setting a deadline of July 21, 2014. The Fed had previously extended that deadline by one year, and now plans to push it out to July 2017.

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One Response to “The FED’s Christmas Present to Big Banks”
  1. DDearborn says:

    Hmmm

    Why is a private for profit banking cartel which is majority owned and controlled by NON US citizens allowed to have any say what so ever regarding any aspect of our government and our money. As far as I am concerned the Federal Reserve is one of the biggest terrorist fronts in history. Economic terrorism on the scale instituted by the FED dwarfs the impact of all the so called terrorist groups operating around the world today. END THE FED RIGHT NOW, SHUT DOWN THE MEMBER BANKS, SEIZE ALL ASSETS OF SAID BANKS AND RETURN THE MONEY THE RIGHTFUL OWNERS, THE US TAXPAYERS!!!

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