By Katherine Reynolds Lewis • Bankrate.com
Halting proprietary stock trading
Federal regulators in early October proposed new regulations aimed at stopping banks from trading for their own profit.
The so-called Volcker rule, named after former Federal Reserve Chairman Paul Volcker, is part of last year's Dodd-Frank Act, the sweeping financial reform law approved by Congress last year.
While high finance and hedge fund investments may seem far removed from your everyday life, consumer advocates and analysts say the stakes for the new law are high. Ultimately, the outcome matters to your pocketbook. Already, JPMorgan Chase & Co., Goldman Sachs and Morgan Stanley have closed or announced plans to shut down their proprietary trading divisions in anticipation of those activities being banned.
With the Office of the Comptroller of the Currency accepting comments on the proposal through Jan. 13, 2012, here's your chance to weigh in on guidelines for the U.S. financial system. The Volcker rule could affect your financial life in several ways.
Promoting bank stability
The overriding aim of the Volcker rule is to promote stability in the banking system and help to prevent a repeat of the financial crisis in 2008. The near-collapse of Lehman Brothers and American International Group, or AIG, prompted Congress to pass an unprecedented $700 billion government bailout in 2008.