The industry has been pushing hard for the repeal of the so-called Volcker rule which seeks to discourage risk-taking by preventing banks from getting involved in certain types of speculative investment activities using their own funds. In practice, this has limited the banks' ability to own hedge funds and certain private equity type vehicles and to trade using proprietary funds (prop trading).
Yet year after year of record operating results posted within the industry since 2014 demonstrate that the rule can hardly be accused of hamstringing banks' earnings potential, according to Bove. He insists that calls for bill's repeal are actually due to the heavy burden placed by the bureaucratic process necessary for meeting the regulatory obligations which tie up thousands of staff given banks are forced to report to five separate agencies.
"The argument is take one agency, take a limited set of data that you're looking for and evaluate Volker on that basis," Bove explained.
"A lot of the stuff which is being proposed here is not so much because it's going to create this tremendous increase in bank earnings but it's going to reduce tremendously the cost of running a bank."
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