Part of the 2010 Wall Street reform act, the Volcker Rule, was finally approved on Tuesday to prohibit proprietary trading, or the act of a bank using its own money during asset trading in order to make a profit. While some loopholes were created in the final deal, it is ultimately a tougher set of regulations than Wall Street has seen in a long time.
Banks will have to re-work compensation packages to avoid rewarding instances of proprietary trading, and every year chief executives from the banks will have to attest to the fact that there is a program in place to enforce the rule. President Obama commented after the deal was released: “Our financial system will be safer and the American people are more secure.”
Not everyone is satisfied though, and there was a partisan split among regulators voting on the rule. Republicans opposed what they felt might be a hindrance on economic growth, while Democrats supported a step toward greater transparency on Wall Street.
The Chamber of Commerce released its own statement after the rule was passed, saying it was “disappointed that regulators may have sacrificed an effective process that could have avoided adverse consequences for Main Street businesses.”
