Goldman Sachs seeks Volcker rule exemption

Goldman Sachs is seeking changes to the Volcker rule to protect its merchant banking unit.

The Volcker rule, which keeps banks from speculative trades in their own accounts, is named for former Federal Reserve Chairman Paul Volcker, who took part in the reforms that followed the 2008 credit crisis aimed at preventing a similar future crisis, AFP reports.

The Volcker rule would stop banks from proprietary trading, or actively trading in their own accounts to boost profits.

Goldman is requesting that regulators allow its merchant-banking unit’s credit funds, which mostly concern pension funds and insurers, to be exempted from the rule.

The company argues that the credit funds are similar to banks but with a different structure and that they help the struggling U.S. economy by making more credit available. Goldman also contends that credit funds are less risky than other investments that would fall under the Volcker rule’s purview, according to AFP.

Regulators have not responded definitively to Goldman’s requests.

Credit funds account for a significant part of Goldman’s business, the Wall Street Journal reports, with Goldman’s main credit funds listed as GS Loan Partners at $10.5 billion in investments and GS Mezzanine Partners at $13 billion.

The final version of the Volcker rule is set to be issued by the end of the year. Financial firms would then have until July 2014 to comply.

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