Bank, Hedge Fund Levy Goes As Volcker Said To Be Unhappy With Reform

Jun 30 2010 | 2:21pm ET

Congressional Democrats went back to the drawing board to further water-down their financial regulation reform bill as the namesake of its flagship alternative investments rules expressed misgivings about the legislation.

House and Senate negotiators agreed to drop a $19 billion levy on banks and hedge funds to pay for measure. Instead, they decided to use $11 billion from a bank bailout fund and higher Federal Deposit Insurance Corp. rates.

The moves come as three of the four Republicans who supported the financial reform bill last month expressed reservations about the bank fee. Sen. Scott Brown (R-Mass.) told Sen. Christopher Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), who are shepherding the bill through the House-Senate conference, that he wouldn’t vote for a bill with the bank fee in it.

The Democrats need the Republican votes to meet a procedural hurdle, even more so following the Monday death of Sen. Robert Byrd (D-W. Va.).

One thing that did survive the House-Senate negotiations was the Volcker rule, which, as originally written, would have barred banks from proprietary trader and from the alternative investments industry.

The former bit survived. The latter, however, has had a great many loopholes punched through it, much to the dismay of the rule’s namesake, former Federal Reserve chairman Paul Volcker, an adviser to President Barack Obama.

Volcker is said to be disappointed by a compromise that will allow banks to invest 3% of their capital in hedge funds and private equity funds. The rule he envisioned would have barred them owning, investing in or sponsoring alternative investment funds.


In Depth

JOBS Act Propels Real-Estate Crowdfunding Platform

Oct 21 2014 | 2:57am ET

If D.J. Paul were a real estate development, he would be described as “multi-use...

Lifestyle

MacDonald-Korth Offers Insights Into Paintings Bought, Sold By Hedgies

Oct 7 2014 | 9:00am ET

Definitive and complete ratings require an in-person examination of an artwork,...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.