Goldman Sachs' (NYSE: GS) special situations group looms as a big test of what exactly is covered by the Volcker Rule, which was passed with Dodd-Frank. Goldman has been willing to cut proprietary trading units that seemed to be incontrovertibly covered by the rule. But it is much less willing to part with other units--or practices--where the law is not quite as specific.

A good example is principal investments. The company no doubt wants to hang onto its franchise, and it seems convinced that such investments are not covered by the rule.

Bloomberg weighs in with a look at the special situations group, which Goldman has long characterized as more of a lender than investor. The newly created division that includes SSG, proprietary-trading businesses and investments in hedge funds and private equity, accounted for nearly a third of the firm's 2010 pretax profit, almost twice the profit from investment banking and money management combined. If you take out SSG, you take out a good portion of that line item.

There are some big questions swirling around the unit. "Can Goldman Sachs claim that purchasing debt makes the division a lender rather than a trader? If the unit holds its investments for months or years, do they cease to qualify as proprietary trading because the firm isn't seeking to 'profit from near-term price movements,' as the FSOC guidelines say?" My sense is that the unit will survive.

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