Some market participants are concerned that the current version of the Volcker Rule would hurt the municipal bond market. Named after Paul Volcker, the former Federal Reserve chairman, the rule would restrict federal insured banks’ ability to trade for their own benefit.
The rule comes in the wake of the 2008 financial crisis, when highly leveraged banking institutions lost huge sums on proprietary investments. But muni market participants are concerned the new restrictions on proprietary trading could have a negative spillover in the muni market.
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