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| Version 1 | Version 2 |
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| 'Volcker rule' to curb banks set for vote by regulators | 'Volcker rule' to curb banks set for vote by regulators |
| (35 minutes later) | |
| US regulators are set to vote on the Volcker rule, a measure designed to place restrictions on the finance industry in the wake of the 2008-2009 financial collapse. | US regulators are set to vote on the Volcker rule, a measure designed to place restrictions on the finance industry in the wake of the 2008-2009 financial collapse. |
| Named after former Federal Reserve chairman Paul Volcker, it bans banks from using their own profits to invest. | Named after former Federal Reserve chairman Paul Volcker, it bans banks from using their own profits to invest. |
| It is considered the centrepiece of the 2010 banking reform legislation known as Dodd-Frank. | It is considered the centrepiece of the 2010 banking reform legislation known as Dodd-Frank. |
| Five separate regulatory agencies are expected to approve the rule Tuesday. | Five separate regulatory agencies are expected to approve the rule Tuesday. |
| Three of those agencies, the Federal Reserve, the Commodity Futures Trading Commission (CFTC) and the Federal Deposit Insurance Corp, were set to hold public votes. | Three of those agencies, the Federal Reserve, the Commodity Futures Trading Commission (CFTC) and the Federal Deposit Insurance Corp, were set to hold public votes. |
| However, the CFTC cancelled its public meeting because of a snow storm in Washington, DC, but said it still planned to vote on the measure. | However, the CFTC cancelled its public meeting because of a snow storm in Washington, DC, but said it still planned to vote on the measure. |
| The other two regulators, the Office of the Comptroller of the Currency and the Securities and Exchange Commission, will also consider the measure in private later. | The other two regulators, the Office of the Comptroller of the Currency and the Securities and Exchange Commission, will also consider the measure in private later. |
| Although the Volcker rule was passed as part of the Dodd-Frank legislation in 2010, it has faced difficulties in implementation, mostly due to opposition from the banking industry. | Although the Volcker rule was passed as part of the Dodd-Frank legislation in 2010, it has faced difficulties in implementation, mostly due to opposition from the banking industry. |
| Once passed, the measure is expected to be implemented by July 2015. | |
| Long time coming | Long time coming |
| While the skeleton of the Volcker rule has been known for sometime, the specifics of its implementation were unveiled for the first time on Tuesday ahead of the vote. | While the skeleton of the Volcker rule has been known for sometime, the specifics of its implementation were unveiled for the first time on Tuesday ahead of the vote. |
| Stretching to 800 pages, at its core, the rule imposes a strict ban on so-called "proprietary trading" which is when banks use their own profits to make trades. | Stretching to 800 pages, at its core, the rule imposes a strict ban on so-called "proprietary trading" which is when banks use their own profits to make trades. |
| Although banks had been hoping for a less strict interpretation of the rule, which was first proposed by Paul Volcker to US President Barack Obama in 2010, recent trading debacles, including JP Morgan's "London whale" loss, seemed to have led to a stronger measure. | Although banks had been hoping for a less strict interpretation of the rule, which was first proposed by Paul Volcker to US President Barack Obama in 2010, recent trading debacles, including JP Morgan's "London whale" loss, seemed to have led to a stronger measure. |
| Banks have argued that the rule is too comprehensive and makes it difficult to distinguish between trades made for profit and those done simply to hedge against risk. | Banks have argued that the rule is too comprehensive and makes it difficult to distinguish between trades made for profit and those done simply to hedge against risk. |
| "This is the era of 'big brother' banking, where the fortunes of banks are tied to the government like never before," Credit Agricole banking analyst Mike Mayo told the BBC. | "This is the era of 'big brother' banking, where the fortunes of banks are tied to the government like never before," Credit Agricole banking analyst Mike Mayo told the BBC. |
| "Big Brother was asleep on the couch before the financial crisis and now Big Brother seeks to micromanage the banks as a means to prevent future crises, [but] how can anyone in mid level management really understand a proprietary trade?" | "Big Brother was asleep on the couch before the financial crisis and now Big Brother seeks to micromanage the banks as a means to prevent future crises, [but] how can anyone in mid level management really understand a proprietary trade?" |
| In addition to banning proprietary trading, the Volcker rule also imposes restrictions on how and when banks invest in hedge funds and private equity. | In addition to banning proprietary trading, the Volcker rule also imposes restrictions on how and when banks invest in hedge funds and private equity. |
| Profit | Profit |
| Those looking for stricter market regulation cheered the news. | Those looking for stricter market regulation cheered the news. |
| "Volcker himself noted that it's time to make banks boring again. And I think that that's actually correct," Dan Alpert of Westwood Capital told the BBC. | "Volcker himself noted that it's time to make banks boring again. And I think that that's actually correct," Dan Alpert of Westwood Capital told the BBC. |
| Although banks have been preparing for some time, the stricter-than-expected rules could still hurt profits in the near term. | Although banks have been preparing for some time, the stricter-than-expected rules could still hurt profits in the near term. |
| Proprietary trading was once a big profit generator for banks, and a Standard & Poor's analysis found that even a significantly weakened rule could cost the big eight US banks anywhere between $2-3bn a year in foregone earnings. | Proprietary trading was once a big profit generator for banks, and a Standard & Poor's analysis found that even a significantly weakened rule could cost the big eight US banks anywhere between $2-3bn a year in foregone earnings. |
| If a more strict rule is established, it could cost them $8-$10bn a year. | If a more strict rule is established, it could cost them $8-$10bn a year. |
| It could also further damage Wall Street's ability to compete with overseas markets unless similar rules are adopted around the globe. | It could also further damage Wall Street's ability to compete with overseas markets unless similar rules are adopted around the globe. |
| "It will make US banks safer, if the rest of the world goes along with it, then I think it'll make the banking industry safer, but the interlocking aspects of international banking trade are very, very much a threat," said Mr Alpert. | "It will make US banks safer, if the rest of the world goes along with it, then I think it'll make the banking industry safer, but the interlocking aspects of international banking trade are very, very much a threat," said Mr Alpert. |
| Although individual banks are not expected to sue to stop the implementation of the Volcker Rule, some analysts expect that industry groups, such as the US Chamber of Commerce, might engage in litigation to block the measure. | Although individual banks are not expected to sue to stop the implementation of the Volcker Rule, some analysts expect that industry groups, such as the US Chamber of Commerce, might engage in litigation to block the measure. |