“The banks have fired their first salvo in what could soon turn into a war of litigation over the Volcker Rule.
As expected, the American Bankers Association, an industry trade group, filed a motion in federal court on Tuesday in Washington seeking to quickly suspend one part of the Volcker Rule, which was officially completed two weeks ago.
The trade group claims 275 small banks will suffer an imminent $600 million hit to capital and make them less likely to lend to consumers and businesses.
Though the current dispute centers on an obscure and complex investment product, the association’s lawsuit could become an early test of how much the industry can successfully push back against the Volcker Rule. The rule was devised to stop regulated banks from speculatively trading with their depositors’ money and other funds in an effort to avoid some of the problems that led to the bank bailouts in the wake of the 2008 financial crisis.”
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