- Unbeliebable: White House turns Bieber petition response into immigration screed
- Obama signs law denying Iran ambassador’s visa, but says law is ‘advisory’
- Mich. judge to laughing convicted killer: ‘I hope you die in prison’
- Man charged in Kansas City-area highway shootings
- Keystone XL pipeline still on hold after State Dept. decision
- Fla. man charged with killing 16-month-old son to play Xbox undisturbed
- Drones from the deep: Pentagon develops ocean-floor attack robots
- Michigan mayor slaps back atheists’ try to erect ‘reason station’ at city hall
- PHILLIPS: Where is the conservative establishment?
- 7.5-magnitude earthquake shakes southern Mexico
SEC backs ban on banks trading for own profit
WASHINGTON — The Securities and Exchange Commission Wednesday backed a proposal to bar banks from trading for their own profit instead of their clients.
The SEC voted 4-0 to send the ban on so-called proprietary trading out for public comment. The rule was required under the financial regulatory overhaul.
Critics on the left have dismissed the effort as weak and marred by loopholes. Banks argued it would hurt the economy.
The SEC is the third federal regulator to support the proposal, called the Volcker Rule after former Federal Reserve Chairman Paul Volcker. On Tuesday, the Federal Deposit Insurance Corp. and the Federal Reserve both backed it.
For years, banks bet on risky investments with their own money. But when those bets go bad and banks fail, taxpayers may have to bail them out. That happened during the 2008 financial crisis.
Under the proposal, banks must hold investments for more than 60 days and bank managers must make sure employees comply with restrictions.
The public has until Jan. 13 to comment on the rule, which is expected to take effect by July after a final vote by all the regulators. Banks would have until July 2014 to comply.
Critics on the left contend that the rule as written is too vague and its effect on risk-taking will be limited. Banks have a history of working around rules and exploiting loopholes. In this case, banks can make most trades simply by arguing that the trade offsets another risk that the bank bet on.
Wall Street banks say the ban on proprietary trading could prevent them from buying and selling investments that their customers might want.
SEC Commissioner Troy Paredes, a Republican, on Wednesday echoed Wall Street’s criticism. He said the restrictions could dry up the flow of securities trading in the markets and would impose a heavy compliance burden on banks. Still, Paredes voted to approve the draft the rule.
The rule also would limit banks’ investments in hedge funds and private equity funds, which are lightly regulated investment pools. Banks wouldn’t be allowed to own more than 3 percent of such a fund. A bank’s investments in such a fund couldn’t exceed 3 percent of its capital.
Banks could still put their clients’ money into those funds. They will still be able to manage such funds, and collect fees and a percentage of trading profits.
TWT Video Picks
Women losing coverage under Obamacare, too
- Scalia to students on high taxes: At a certain point, 'perhaps you should revolt'
- Former Ranger breaks silence on Pat Tillman death: I may have killed him
- Special Forces' suicide rates hit record levels casualties of 'hard combat'
- Feds approve powdered alcohol; 'Palcohol' available later this year
- Army goes to war with National Guard, seizes Apache attack helicopters
- EDITORIAL: Mark Warner running scared?
- EDITORIAL: Republicans finally fight back in phony 'war on women'
- EDITORIAL: More Lerner smoking-gun emails at IRS
- U.S. Navy to turn seawater into jet fuel
- Critics rail against liberal bias for commencement speakers
Top 10 handguns in the U.S.