In this report, we continue our analysis of key sections in the Treasury report with near-term policy and political impact, looking here at what is recommended for the Volcker Rule.  Reaffirming Secretary Mnuchin’s comments ahead of the report, Treasury does not seek Volcker repeal, as H.R. 10 would do.  Instead, it argues that insured depositaries should not engage in “speculative” trading for their own account due to all their taxpayer backstops.  Covered-fund restrictions across a BHC would also remain under Treasury’s approach for all but the smallest BHCs, although restrictions on which funds are “covered” would nonetheless significantly expand the scope of permissible investments.  As we have noted (see Client Report FHC27), this position is consistent with a “Glass-Steagall 2.0” in which banks remain restricted but their affiliates and parent companies – now also sanctioned by Volcker – are free to trade again.

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