The Volcker Rule, mandated by the Dodd-Frank Act of 2010, prohibits banks from engaging in risky, speculative investments and proprietary trading, TheDeal reports.
Many financial institutions have objected to the current proposal, suggesting that the rule is too broad and would have a negative impact on U.S. competitiveness and the economy.
“We suggest that the activities of non-bank affiliates of depository institutions be exempted from the requirements otherwise applicable to ‘banking entities,’” Wedbush Inc., a financial and investment services firm, said, according to TheDeal. “The proposed rule would sweep up numerous entities whose activities have no adverse impact on any depository institution…Indeed many of these entities are engaged in entirely separate businesses.”
Foreign banks have also criticized and warned against the Volcker Rule, noting that the legislation would have international economic implications.
Other investors and venture capitalists have voiced concern about how the rule’s prohibition of investments in private equity funds might affect future business investments.
“We urge you either to conclude that ‘private equity funds’ do not include venture capital funds or that banks may sponsor and invest in venture capital funds as ‘permitted activity,” Sofinova Ventures said, TheDeal reports.