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- The bank’s shares rose Thursday after financial regulators announced they would ease the Volcker Rule from the era of the financial crisis.
- The Volcker Rule generally prohibits banks from engaging in property operations and having certain relationships with hedge funds and private equity funds.
- The rule change will provide banks greater flexibility to sponsor funds that extend loans to companies, allowing investments in qualified venture capital funds.
- JPMorgan, Bank of America, Goldman Sachs, Citigroup and Wells Fargo listed more than 3% on the news.
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Banks’ shares rose as much as 3% on Thursday after federal regulators repealed the Volcker Rule, an era of the financial crisis era that restricted banks from operating private business units and acquiring or retaining holdings. owned by hedge funds or private equity funds.
The Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve, the Office of the
Comptroller of the Foreign Exchange, Securities and Exchange Commission, and Commodity Futures Trading
The commission issued a final rule on Thursday “to modify and clarify the provisions of covered funds” of the rule, according to the press release.
The rule change, according to regulators, will do three things:
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1. Facilitate capital formation by providing banks with greater flexibility to sponsor funds that provide loans to companies so that banks can allocate resources to a more diverse range of long-term investments.
2. Protect financial security, soundness and stability by not allowing banks to engage in any activity that is not currently permitted if performed on their balance sheets.
3. Provide more clarity and certainty about the activities allowed, which will improve supervision and implementation of the Volcker Rule.
According to Bloomberg, the rule change will free up to $ 40 billion for banks.
In a statement on the rule change, Rob Nichols, president and CEO of the American Bankers Association, said: “We welcome the measured steps taken today by the FDIC, which will allow banks to further support the economy. at this difficult time for the nation. “
Shares of JPMorgan, Bank of America, Goldman Sachs, Citigroup and Wells Fargo traded more than 3% on the news in trading on Thursday afternoon.
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