Volcker rule gets SEC backing

Volcker rule: The proposed ban on banks trading for their own profit got support from the SEC. The Volcker rule is part of the Dodd-Frank financial regulation overhaul.

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    Paul Volcker, former chairman U.S. Federal Reserve takes part in the Spruce Meadows Changing Fortunes Round Table on business in Calgary, Alberta, September 9. The Volcker rule is his creation.
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The Securities and Exchange Commission backed a proposal to bar banks from trading for their own profit instead of their clients

The SEC voted Wednesday to send the ban on so-called proprietary trading out for public comment. Two other federal regulators on Tuesday backed the Volcker rule draft, which was required under the financial regulatory overhaul.

For years, banks bet on risky investments with their own money. But when those bets go bad and banks fail, taxpayers may have to bail them out. That happened during the 2008 financial crisis.

Under the proposal, banks must hold investments for more than 60 days and bank managers must make sure employees comply with restrictions.

Critics on the left dismissed the effort as weak. Banks argued it would hurt the economy.

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