NEW YORK (
TheStreet) -- Paul Volcker, the former Federal Reserve Chairman and adviser to President Obama, defended the rule named after him following
concerns raised by credit ratings agency Standard & Poor's that it might hamper banks' creditworthiness.
In a recent report, S&P analysts stated that different versions of the Volcker Rule were being contemplated.
The Wall Street Journal followed up shortly afterward with an anonymously-sourced story that said regulators were in disagreement about how strict the rule ought to be. The controversial rule is aimed at reducing risk in banks by placing strict limits on the amount of capital they are allowed to wager on directional market bets.
S&P stated that a stricter version of the rule might actually hamper the creditworthiness of
Morgan Stanley (
MS) and
Goldman Sachs (
GS) by making them less profitable.
Volcker responded to questions about the S&P report via email, writing just two sentences. "I don't know what S&P defines
as a 'less strict' or 'stricter' Volcker Rule" he wrote. "What I want is sensible rules which surely will make banks safer and more easily managed."
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Written by Dan Freed in New York.
