It was December 10, 2013, and Washington, D.C., was paralyzed by a cataclysmic dusting of snow. While most Washington residents spent the day figuring out how to shovel the overwhelming inch of slush, the leaders of five government agencies joined conference calls, voting to adopt one of the most important financial regulations enacted in decades.
Commentators have been arguing for years about whether the Volcker Rule is a good idea and whether it will work. But nobody seems to have noticed a huge difference between the final rule and the statute as written. This change may enable it to “work,” but not in a way that should please anyone. In fact, it may threaten or eliminate banks’ ability to perform services for which we rely on them — and services that the rule is explicitly supposed to allow. More important, the rule’s final adoption represents the next stage of some of our most disturbing regulatory trends. It may look like a minor storm, in other words, but this is Washington, D.C., we’re talking about.