Documents released by the Federal Reserve on Monday show that its officials met with some of Wall Street’s major financial firms earlier this month to discuss Volcker Rule implications.
The Fed met with representatives from Goldman Sachs, JPMorgan Chase and Morgan Stanley on Nov. 8, according to Bloomberg.com. Bank lawyers H. Rodgin Cohen and Michael Wiseman from Sullivan & Cromwell were also present during the meeting.
According to the documents, the meeting entailed a discussion on “possible unintended consequences of the rule.”
The Volcker Rule, a provision in the Dodd-Frank Act, prohibits financial firms from investing more than three percent of their Tier 1 capital in private equity or hedge funds, Bloomberg.com reports.
The Volcker RUle is intended to reduce risk-taking by bank holding companies that are recipients of government assistance. Democratic lawmakers say it will prevent the type of risky trading that fueled the 2008 financial crisis.
Financial experts estimate that this will cost U.S. national banks nearly $1 billion dollars in compliance and capital costs.
A few firms on Wall Street have already taken preemptive moves by shutting off some funds that wager their capital.
Moody’s Investors Services said in Oct. that the Volcker Rule would be a “credit negative” for bondholders with financial firms that have “substantial market-making operations,” according to Bloomberg.com.