By Suzy Jagger
Washington has backed down on proposals to block investment banks from engaging in proprietary trading activities, Britain’s top financial regulator told MPs yesterday.
Lord Turner of Ecchinswell told the Treasury Select Committee that Paul Volcker, head of America’s newly formed Economic Recovery Advisory Board, had changed his mind over pursuing hardline reform.
Instead, Mr Volcker, one of President Obama’s most trusted economic advisers, has taken the view that investment banks should be allowed to trade on their own books but must be penalised with onerous capital requirements, to act as money cushions, should the trades go awry.
Continue reading Washington Aide ‘Has Changed Mind’ Over Proprietary Trading