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January 30, 2020

The Volcker Rule Loopholes Proposed Today Further Reopen the Gambling Casino at Wall Street’s Biggest Banks by Allowing More Proprietary Trading

Thursday, January 30, 2020
Contact:, 202-618-6433

Washington, D.C.  –  Dennis M. Kelleher, Chief Executive Officer of Better Markets, issued the following statement with respect to the action taken by Board of Governors of the Federal Reserve (“Federal Reserve”), the Federal Deposit Insurance Corporation (“FDIC”), and the Commodities Futures Trading Commission (“CFTC”) regarding the Volcker Rule:

“The Volcker Rule prohibition on high-risk, speculative proprietary trading at taxpayer-backed banks is a critical pillar of financial reform.  It is targeted at preventing another catastrophic financial crash like 2008 and eliminating the reckless, get-rich-quick, bonus-driven gambling culture that infected banks’ dangerous activities and warped priorities in the years before that crash.  The Volcker Rule prohibited both direct inside-the-bank and indirect outside-the-bank (via external funds) proprietary trading to close those Wall Street gambling casinos.

“Today’s proposal undermines the Volcker Rule prohibition and its objectives by opening more loopholes that will allow Wall Street’s biggest taxpayer-backed banks to again engage in substantial proprietary trading.  This is being done by changing the definition of ‘covered funds’ and related terms of the Volcker Rule, which collectively will allow banks to invest in funds outside the bank that engage in proprietary trading.  These changes will allow banks to do indirectly what they are prohibited from doing directly.

“Last year, financial regulators opened up a series of loopholes regarding direct inside-the-bank proprietary trading by changing the definition and application of market-making and hedging, along a with an Alice-in-Wonderland ‘presumptions of compliance’ for certain trading activities.  Those significant Volcker Rule loopholes were bad enough.  However, combined with today’s action, the Volcker Rule ban is now being turned into Swiss cheese, full of expansive loopholes that Wall Street will exploit to invest in speculative high-risk investments and an alphabet soup of derivatives from CLOs, CDOs, CDO-squared and, yes, CDO-cubed.  This gambling, often with taxpayer-backed deposits, will boost Wall Street’s already historically high profits while again endangering the financial system, the economy and taxpayers.

“Supporters claim the proposed changes are mere ‘simplifications,’ ‘clarifications,’ and ‘streamlining.’  They are not.  They go to the core of the scope and effectiveness of the Volcker Rule ban, impairing if not defeating its statutory purpose and objectives.  Regardless of the stated reasons, there’s no denying that these changes are what Wall Street’s biggest banks have lobbied relentlessly for 10 years to obtain.  Today’s action will deliver Wall Street another huge deregulation victory, but it will deliver the U.S. taxpayers an eventual loss.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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