Goldman Sachs, JPMorgan Met With Fed Staff Over Volcker Rule

Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS) pressed the Federal Reserve earlier this month on the potential unintended consequences stemming from its proposed ban on proprietary trading.

Bank lawyers H. Rodgin Cohen and Michael Wiseman from Sullivan & Cromwell also attended the Nov. 8 meeting, according to documents released by the Fed today. The firms discussed “possible unintended consequences of the rule,” according to the Fed.

The proposal, which bans banks from investing more than 3 percent of their Tier 1 capital in private-equity or hedge funds, will cost U.S. national banks about $1 billion in extra regulatory and capital costs, according to a Sept. 7 analysis by the Office of the Comptroller of the Currency.

U.S. lawmakers passed the Volcker rule last year as part of the Dodd-Frank Act, aiming to curb risk-taking by bank holding companies that receive federal assistance. Wall Street firms have shut or spun off some funds that wager their capital in advance of the rule, named after former Fed chairman Paul Volcker.

To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.