Volcker rule already having an effect?

February 8, 2010 | By Jim Kim

There's no real way to handicap whether regulators will succeed in forcing banks to ratchet down their proprietary trading and investing activity. But is the proposed Volcker rule already having an effect? It seems that way. Citigroup (C) is said to be in talks to sell off its $10 billion private-equity unit. Morgan Stanley (MS) is mulling its stakes in FrontPoint Partners and other hedge funds. And JPMorgan Chase (JPM) is reportedly unsure if it wants to go ahead with plans to buy the North American operations of Sempra Commodities, according to Bank Investment Consultant.

Now, risk was out of vogue at a lot of banks even before the rule was proposed. And there is a strong sense that even if the rule never develops legs in Washington--to be sure, Congressional support isn't as strong as proponents would like--there will still be some regulatory changes that affect the business. Higher capital requirements, for example, are quite likely. There could be heightened disclosure requirements as well. Banks may already be acting.

For more:
- here's the article