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November 12, 2010

Wall St. Banks Exploiting Reform Loophole to Avoid Volcker Rule
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Wall Street firms are reportedly exploiting a loophole in financial
reform legislation to continue the practice known as proprietary
trading, in which banks trade financial securities from their own
commercial accounts. Former Federal Reserve Chair Paul Volcker had
proposed the curbs to help undo some of the damage of the 1999 repeal of
the Glass-Steagall Act, which had ensured the separation of commercial
and investment banking. But according to the Financial Times, banks have
continued the practice because the Volcker rule excludes "principal
investments," or long-term direct purchases of securities and assets.



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