Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Goldman’s Rogers Says Volcker Rule Could Increase Risk

Goldman Sachs Group Inc. said a proposed U.S. ban on banks’ proprietary trading and limits on their investments in private equity and hedge funds may boost financial-system risks the measure was designed to curtail.

“Without substantial revisions, the proposed rule will define permitted market making-related, underwriting and hedging activities so narrowly that it will significantly limit our ability to help our clients,” John F.W. Rogers, the firm’s chief of staff, said in one of two comment letters on proposed Volcker rule restrictions. The rule would stifle Goldman’s ability to help clients “raise capital, manage their risks, invest their wealth and generate liquidity,” he wrote.

Goldman Sachs joined its banking rivals, including JPMorgan Chase & Co., Bank of America Corp. and Morgan Stanley, in registering complaints about the 298-page proposal released for comment by U.S. regulators including the Federal Reserve and the Securities and Exchange Commission ahead of yesterday’s public comment deadline. Regulators, who sought input on more than 1,300 questions in their October proposal, now have until July 21 to complete and implement the rule.

Lawmakers included the rule, named for former Fed Chairman Paul Volcker, in the Dodd-Frank Act to restrict risky trading by banks that operate with federal guarantees. The Fed, SEC, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency invited comment on how the measure would affect market-making, liquidity, foreign institutions, and private equity and hedge fund investments.

‘Key Aims’

“Although one of the key aims of Dodd-Frank was to promote greater stability in financial markets, we are concerned that the proposed rule could inadvertently increase systemic risk,” Rogers wrote.

If the rule makes hedging more expensive, “banking entities’ clients and customers will be forced to hold more risk on their own books,” he said. “This will increase the volatility of their earnings and hurt their share prices, which in turn will raise their cost of capital, reduce their capacity to invest, lower their returns to shareholders and diminish their appeal as strategic partners.”

Negative consequences “could be far-ranging,” with the Volcker Rule putting U.S. firms at a competitive disadvantage to their non-U.S. counterparts and imposing costs “which do not appear to have been sufficiently analyzed,” he said.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.