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Perspectives on Dodd-Frank and Finance$
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Paul H. Schultz

Print publication date: 2014

Print ISBN-13: 9780262028035

Published to MIT Press Scholarship Online: May 2015

DOI: 10.7551/mitpress/9780262028035.001.0001

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The Origins and Intent of the Volcker Rule

The Origins and Intent of the Volcker Rule

(p.105) 7 The Origins and Intent of the Volcker Rule
Perspectives on Dodd-Frank and Finance

Priyank Gandhi

The MIT Press

Professor Priyank Gandhi discusses how the Volcker Rule was written to prevent banks from engaging in risky trading. He discusses the practical difficulties in determining which trading activities are permitted under the rule and which activities are prohibited. Professor Gandhi mentions several potential pros and cons of banning proprietary trading, and suggests that trading banned under the Volcker Rule may provide a natural hedge against downturns in banks’ interest income.

Keywords:   Volcker Rule, Moral Hazard, Proprietary Trading

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