The Volcker Rule, named after the former chairman of the United States Federal Reserve Paul

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The Volcker Rule, named after the former chairman of the United States Federal Reserve Paul Volcker, was first publicly discussed in January 2010. President Obama had proposed the Volcker Rule as an additional ruling to the Dodd-Frank Wall Street Reform and Consumer Protection Act, a bill that was at the time already under consideration by Congress. The Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as the Dodd-Frank Act, was projected to help further promote and regulate financial stability of the United States’ economy, especially during the Great Recession, which officially lasted from 2008 to 2010. The general purpose of this Act is to regulate the financial regulatory system by avoiding any excessive or…show more content…
This Act contributed to the separation of these two types of banking firms, in a way that it would prevent any engagement in risk-taking investments or speculation and instead, investing in corporations to stimulate growth, which in return would benefit the depositors, American taxpayers, and then the overall economy. Nevertheless, this Act was repealed in the late 90’s under the Clinton administration, which rapidly created disorder in an unregulated system of bank funds. The Volcker Rule serves to create a resolution after the repeal of the Glass-Steagall Act, especially more so since it was used as a basis as an addition to the Dodd-Frank bill. While financial banks were inadequately controlled by regulatory agencies, there was a necessity for fresh policies to resolve these issues. Prior to the Volcker Rule becoming implemented, the crooked financial activity done at the time had affected the clients of the banks. The complexity of the regulations caused dissatisfaction for the clients and customers and eventually affected the overall business flow of the bank institutions. There was a strong need for new procedures and restrictions before the banking industry would have another breakdown and in the worst case, cause another financial crisis within the American economy. The biggest problem during this crucial financial time included how the banking industry was consistently earning large amount of money from these high-risk trades with the institution’s own

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