US ban on high-risk bank trades approved
WASHINGTON (AP) — The Federal Reserve and the Federal Deposit Insurance Corp. have taken a major step toward preventing the extreme risk-taking by big banks that helped trigger the 2008 financial crisis.
Three other regulators are expected to follow suit today.
Under the so-called Volcker Rule, U.S. banks will be barred in most cases from trading for their own profit. The practice has been very lucrative for big banks like JPMorgan Chase, Bank of America and Citigroup. The rule also limits banks’ investments in hedge funds.
Congress instructed regulators to draft the rule under the 2010 financial overhaul law. It was agreed to after three years of drafts, debates and lobbying by Wall Street banks.
The final version is stricter than many had expected. But the rule still provides some exemptions.