Senate Urges Tougher Volcker Rule, With Exemption

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http://www.nytimes.com/reuters/2010/06/24/business/business-us-financial-regulation-volcker-dodd.html?_r=1&hp

Banks would face stricter limits on risky trading and investing, but could make small investments in private equity and hedge funds under a modified "Volcker rule" backed by U.S. Senate Democrats on Thursday.

In a victory for financial institutions that had pushed for a fund-investing loophole in the bill, the head of the Senate's negotiating team on a panel writing landmark Wall Street reform legislation proposed changes to the controversial rule.

Democratic Senator Christopher Dodd proposed that up to 3 percent of a bank's tangible common equity could be invested in such funds, but that a bank's investment in any one fund could not exceed 3 percent of the fund's total ownership interest.

Banks would have some time to sell off stakes in private equity and hedge funds that exceed the new caps, he said.