Former Federal Reserve Chairman Paul Volcker is mounting a full-throated defense of the key financial reform effort bearing his name, arguing in a public letter to regulators that concerns aired by the banking industry are overblown.
The so-called “Volcker Rule” is a major component of the Dodd-Frank financial reform law, and is aimed at preventing banks from making risky trades with their own cash.

This ban on “proprietary trading” has been met by a full-court press from the financial industry, which is pressuring regulators to avoid a heavy-handed implementation that it says could stifle American competition and needlessly hinder markets.

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Financial reform advocacy group Better Markets took the other side of the argument, saying regulators need to make sure banks don’t get to make risky trades while enjoying taxpayer backing.

“The argument for the Volcker Rule is obvious — we shouldn’t allow risky bets that pay enormous bonuses to bankers if they work, but stick taxpayers with the bill if they fail. That’s not capitalism; that’s basically a subsidized trip to the blackjack tables,” said Dennis Kelleher, the president and CEO of the group.

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