Intended and Unintended Results of the Proposed Volcker Rule

Skold, Alida S. (2011): Intended and Unintended Results of the Proposed Volcker Rule.

Abstract

Regulation is written with the intent of protecting the vulnerable. However, it can cause an undesirable result if written without understanding how the positive intent can have a negative impact. In its present form, the proposed Volcker Rule has the potential of expanding the liquidity crisis that devastated the housing market into the capital markets. Risk will be transferred to less regulated entities. Banks conducting business in the U.S. or with U.S. “residents” will be at a competitive disadvantage.

• Item Type: MPRA Paper
• Language: English
• Keywords: Volcker Rule; Regulation; Prop Trading; Market Making; Hedge Fund; Risk
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E02 - Institutions and the Macroeconomy; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, Operations, and Impact; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation; L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General

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