Banks make plans to reduce risky ventures

| 09/08/2010

(Reuters): Speculation continues to grow as to which Wall Street bank will be looking to get out of proprietary trading or the private equity business in order to comply with new financial regulatory reform legislation. But despite recent moves by Bank of America, Morgan Stanley and Goldman Sachs on that front, most banks will be able to pare back investments in risky ventures without making dramatic changes to their structure. The new Volcker rule, named for former Federal Reserve Chairman Paul Volcker, restricts banks from proprietary trading and sets new limits on the size of private equity or hedge fund investments. Banks have several years to reduce their holdings — meaning that even institutions with significant private equity holdings are likely to be able to keep units.


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