This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Don't Hold Breath on Volcker Rule's Impact

NEW YORK ( TheStreet) -- Uh, better late than never?

A report by Bloomberg News Tuesday points out that it could take up to 12 years before banks like Citigroup (C - Get Report), Goldman Sachs (GS - Get Report), Bank of America (BAC - Get Report)and JPMorgan Chase (JPM - Get Report) spin off their internal hedge funds and private equity units.

Provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act will require banks that invest their own capital in private equity and hedge funds to reduce that total to no more than 3%. The rules are a watered-down version of proposals initially unveiled by President Obama earlier this year, named after 82 year-old Obama adviser and former Fed Chairman Paul Volcker.

Though the Volcker rules take effect in July 2012, compliance would not be required for two more years. Then there is a three-year extension period, plus another five years for "illiquid" funds, such as private equity or real estate, to get sorted out.

The lengthy timeline for implementation of the rule is just one more example of how the much-hyped financial reform legislation is much softer on big banks than the publicity around it would suggest.

Probably the most feared provision in Dodd-Frank would have forced banks to give up the bulk of their derivatives operations. However, many derivatives products were excluded from the mandate, and banks will still be able to trade others out of affiliated entities.

Though bank stocks have traded off in recent weeks, partly on fears over the legislation, they rallied on Friday after the House and Senate reached agreement on a bill. The bill still requires a final vote in Congress before it gets sent to President Obama, and the death of Robert Byrd (D., W. Va.), a supporter of the bill, has complicated matters. Still, last minute haggling between Congress and the Obama administration to ensure the bill's passage is not expected to affect it substantially.

-- Written by Dan Freed in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.51 -1.90%
C $46.29 -0.94%
GS $163.40 -0.54%
JPM $62.92 -1.10%
MS $26.98 -0.92%


Chart of I:DJI
DOW 17,711.01 -119.75 -0.67%
S&P 500 2,056.42 -19.39 -0.93%
NASDAQ 4,762.94 -42.3510 -0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs