Volcker Rule

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The Volcker Rule is section 619^[1] of the Dodd–Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 1851). The rule was originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker in 2010 to restrict United States banks from making certain kinds of speculative investments that do not benefit their customers.^[2] It was not implemented until July 2015. Volcker argued that such speculative activity played a key role in the 2007–2008 financial crisis. The rule is often referred to as a ban on proprietary trading by commercial banks, whereby deposits are used to trade on the bank's own accounts, although a number of exceptions to this ban were included in the Dodd–Frank law.^[3][4]

The rule's provisions were scheduled to be implemented as part of the Dodd–Frank Act on July 21, 2010,^[5] with preceding ramifications,^[6] but were delayed. On December 10, 2013, the necessary agencies approved regulations implementing the rule, which were scheduled to go into effect April 1, 2014.^[7]

On January 14, 2014, after a lawsuit by community banks over provisions concerning specialized securities, revised final regulations were adopted.^[8] The rule came into effect on July 21, 2015.^[9] On August 11, 2016, several large banks requested a 5-year delay to exit illiquid investments.^[10]

On January 30, 2020, the Federal Reserve put forward a proposal to roll back some provisions of the rule, specifically rules that limit bank investment in venture capital and securitized loans.^[11] These changes were adopted on June 25, 2020.^[12]