According to an article in today’s New York Times, it appears that the “Volcker Rule” may make it through House/Senate conference committee.  This update comes as House and Senate negotiators are preparing financial regulation legislation for approval by President Obama.

Named after former Federal Reserve Chariman Paul Volcker, the financial regulation bill currently being negotiated by House/Senate conference committee includes (among many other things) a provision restricting capital market activity by banks and bank holding companies.  Specifically, the provision, if included in the final version, would require regulators to implement regulations for banks, their affiliates and bank holding companies, to prohibit proprietary trading, investment in and sponsorship of hedge funds and private equity funds, and to limit relationships with hedge funds and private equity funds.  Non-bank financial institutions supervised by the Federal Reserve will also have restrictions on their proprietary trading and hedge fund and private equity investments.

Earlier in the legislative process, it appeared that the Volcker Rule was going to be removed or watered down, but that view seems to be changing.  As mentioned in the New York Times article, “Representative Barney Frank of Massachusetts, the Chairman of the House Financial Services Committee and leader of the conference process, said last week that House and Senate negotiators had reached “conceptual agreement” on a proposal by Senators Jeff Merkley of Oregon and Carl Levin of Michigan, both democrats, to expressly forbid banks from trading for their own accounts or from investing in hedge funds or private equity funds.”

While the above provides a glimpse into the ongoing legislative process, only time will tell what the financial regulation bill will ultimately include (or exclude).  Current indications are that the House/Senate conference committee is aiming to provide financial regulation to President Obama for approval in the next few weeks.  Stay tuned….