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What your opinion on the newly minted Volcker rule? Banks should be focus on their core businesses, rather than be too "innovative" on financial engineering, IMO.

US bank group threatens lawsuit over Volcker rule

WASHINGTON] The American bankers Association on Monday said it would mount a legal challenge to the "Volcker rule" unless US banking regulators softened a provision of the rule that restricts bank ownership of certain investments. "If the rule is not suspended, we will shortly file a lawsuit challenging the rule ... and seeking emergency relief,"wrote Frank Keating, the chief executive of the ABA, wrote in a letter to regulators.

At issue is a provision of the rule that prohibits banks from owning more than 3 per cent of any individual hedge fund or private equity fund, and bars banks from investing more than 3 per cent of their total equity capital in private funds.

The banks worry that the provision will force them to sell their interest in collateralized debt obligations backed by so-called trust-preferred securities, a type of security that has characteristics in common with equity and debt instruments.

The ABA's letter, sent to the heads of the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp, is the latest back-and-forth public statement by the trade group and regulators. - Reuters

Source: Business Times Breaking News
Volcker rule is the only significant regulation that came out of the massive credit crisis. Enough said.

IMHO the root is dismantling Glass-Steagall was a major mistake. Volcker rule is more patch work.
As a provision of 2010's Dodd-Frank Act, the Volcker Rule divides retail banking and investment banking into separate companies. Many experts believe this is important to Wall Street reform, but Congress has dragged its feet, saying that enacting Volcker will damage liquidity and thus increase transaction costs for consumers.
US regulators have compromised, after the lawsuit threat...

US regulators tweak Volcker rule for some securities

[WASHINGTON] Five US bank regulatory agencies on Tuesday approved a tweak to the Volcker rule that would allow banks to keep interests in certain funds backed by trust-preferred securities.

The change was aimed at easing the concerns of small banks that they needed to dump certain investments they thought would be allowed under the rule, losing money in the process.

The American Bankers Association, or ABA, a bank trade group, sued regulators, and lawmakers from both parties have backed the banks.

After regulators announced the revision, the bankers group said it was considering the change and would decide on Wednesday whether to continue with its lawsuit. "ABA commends the regulators' speed and judiciousness in revisiting the impact of the Volcker rule. Their action today should allow banks to avoid taking millions of dollars in unexpected and unnecessary write downs," the group said in a statement on Tuesday.

Ref: Reuters and Business Times Breaking News