The Volcker Rule, enacted as part of the Dodd-Frank Act in 2010, has lately received a lot of adverse commentary. The complexity of the draft-implementing regulation, and the clear indication in the regulators' questions that they did not know how to make the rule work; has produced a new round of criticism. But that's only one of the problems this rule creates, and a relatively minor one.

Although the rule was sold as prohibiting banks from using insured deposits to fund risky trading, the act covers "bank related entities," which includes bank holding companies and their subsidiaries, from engaging in proprietary trading for their own accounts. These entities are ordinary corporations, and fund themselves in the capital markets by issuing debt and equity. They don't take deposits. It's unclear why these companies are excluded from engaging in a financial activity, when other corporations and hedge funds are not.

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