The Senate is now considering a set of exemptions to the Volcker Rule that would allow the asset management divisions of banks to continue business as usual when it comes to investing client money in hedge funds and private equity. The Senate finance regulatory reform bill under debate on Capitol Hill this week contains a prohibition on such funds that, if left as is, would severely curtail the way the asset management division of a bank can invest.
It is a less-examined prohibition than the one against proprietary trading, but one with a potentially greater impact on the banking industry, according to a study that the law firm Shearman & Sterling released on June 8.
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