Reexamining The Volcker Rule After JPMorgan's Derivatives Loss
By Rupert Nicholson:
What is the Volcker Rule?
The Volcker Rule is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It got its name from the former Chairman of the Federal Reserve, Paul Volcker. The rule aims to put an end to proprietary trading by banks on their own accounts. Prop trading is when a company trades stocks, commodities, derivatives etc. using its own cash reserves to make a profit for itself. The goal of the rule is to simply stop the banks trading for profit because the taxpayer will have be responsible for terrible mistakes. The Volcker rule is meant to come into effect on July 21st 2012.
's $5 billion loss
JPMorgan's (JPM) CEO Jamie Dimon announced on May 10th that the company had made a $2 billion trading loss on faulty derivatives bets in London. This has since spiraled into a potential $5 billion trading loss. ItComplete Story »