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House Budget Committee Chairman Ryan appears to endorse Volcker Rule

Paul Ryan

Rep. Paul Ryan’s (R-Wis.) comments at a Wisconsin town hall meeting last week indicate that he supports the Volcker Rule, a Dodd-Frank provision aimed at eliminating proprietary trading—or risky investments with client money.

“We should make sure you can’t get too big where you’re going to become too big to fail and trigger a bailout, and if you take risky behavior then you go into bankruptcy and we open up the bankruptcy laws to allow them to go into bankruptcy,” Ryan, who is also the chairman of the House Budget Committee, said, according to ThinkProgress. “And more importantly if you’re a bank and you want to operate like some non-bank entity like a hedge fund, then don’t be a bank. Don’t let banks use their customers’ money to do anything other than traditional banking.”

The Volcker Rule, named after former Federal Reserve chairman Paul Volcker, has been a hot-button topic in the banking industry. While proponents argue that the rule will reduce the same risky behavior that led to the 2008 financial collapse, banks say that the rule will ultimately reduce market liquidity and the ability of U.S. firms to compete in a global economy.

Foreign regulators from the United Kingdom, Japan and Canada have also warned against the rule, saying that it would affect foreign government bonds and would hurt international governments’ ability to raise capital.

“It will be difficult for regulators to ignore a sizable number of G20 countries, which will all be saying something similar—which is the Volcker [R]ule’s extraterritorial reach will hinder these countries’ sovereign debt markets,” Douglas Landy, a partner at the law firm Allen & Overy LLP that represents Canadian banks, said, Bloomberg reports.

Many critics of the measure have called for a re-proposal of the rule, though regulators have no plans to re-propose a new draft of the provision. The rule is set to take effect July 21, though banks will have until July 2014 to come into full compliance with the rule.

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