Volcker Rule reforms expand options for raising VC funds – TipsClear
Time to plant it Based on our thinking we can discuss an esoteric but important policy change and how it will affect the VC world.
The financial crisis of 2008 devastated the global economy. One of the reforms brought about by retaliation for that situation was a policy known as the Volcker Rule.
The rule, proposed by former Fed President Paul Volcker and passed into law with the Dodd-Frank Act, was designed to limit the way that banks balance their balances to avoid such catastrophic systemic risks You can invest the sheet that the world saw during the crisis. Many banks faced a liquidity crunch after investing in mortgage-backed securities (MBS), collateralized debt obligations (CDOs), and other more mysterious speculative financial instruments (such as POGs, or piles of waste).
Several reforms are being made to the Volcker Rule, a domestic regulatory priority for the Trump administration since Inauguration Day.
One of the unintended consequences of the rule is that it limits banks from investing in certain “covered funds”, which were written broadly enough that it was, well, with VC firms- Also covers hedge funds and other private equity vehicles. Improvements to that policy (and to the rule in general) have been proposed for a decade with little traction recently.
Now, many reforms are being made to the Volcker Rule, which has been a domestic regulatory priority for the Trump administration Opening day.
First, a simplification of some of the rules of the rule was passed at the end of last year and came into force in January. Now, a final rule to improve the applications of the Volcker Rule for VC firms was agreed, among other issues, by a group of US regulatory agencies, and will come into force later this year.