It turns out it’s not just self-interested, profit-hungry banks that have issues with the Volcker Rule. Financial regulators outside the U.S. aren’t so crazy about it, either. And some non-U.S. banks, for that matter—and they’re supposed to benefit from the rule. From Bloomberg:
Foreign regulators including Canada’s Office of the Superintendent of Financial Institutions and the Bank of Japan also have voiced concern in letters to U.S. regulators over the impact the rule may have on the liquidity of markets for non- U.S. government bonds.
Foreign firms also have questioned the reach of the rule, which may ban proprietary trading or investment in funds that touch the U.S. in any way, including through exchanges and information or technology systems.
Remember, too, that origins of the credit crackup had nothing to do with proprietary trading by insured depositories. The Volcker Rule will end up being a huge, idiotic hassle. . . .