The Volcker Rule, a provision of the 2010 Dodd-Frank Act that prohibits proprietary trading—or risky investments with client funds, was designed to prevent a repeat of the 2008 financial collapse. Financial institutions have lobbied U.S. regulators to lend broad exemptions to the rule, according to The Huffington Post.
Following JPMorgan Chase & Co.’s announcement of a $2 billion trading loss earlier this month, however, support for the exemptions diminished. Since JPMorgan CEO Jamie Dimon announced the losses, potential losses have reached $3 billion, The New York Times reports.
The hearing scheduled for May 31 will include a panel of industry groups, former regulators and reform advocates.
The current rule prohibits banks that accept government backstops from trading for their account and includes exemptions that would allow banks to engage in risk-hedging and market-making activities.
“It’s probably one of the more challenging jobs Congress has given the five regulatory agencies,” CFTC Chairman Gary Gensler said, adding that the line between risk-hedging and proprietary trading can be blurry, according to The Huffington Post.