2012-02-22nytimes.com

The Volcker Rule, and its limitations on bank trading, may have the unintended effect of dividing the world back into investment banks and commercial banks. The unusual twist here is that Goldman Sachs and Morgan Stanley may end up stuck on the wrong side of the fence, treated under the law as commercial banks instead of the investment banks they once were.

...

... the Volcker Rule does not apply to private equity funds, hedge funds and smaller investment banks that do not themselves own banks.

So if the Volcker Rule is really a drag on the economy, hedge funds and smaller investment banks that are not subject to it may try to interject themselves and bridge the gap that the investment banks can no longer fill.

...

The Volcker Rule, for all its good intentions, may perhaps unleash a burst of rapid financial innovation to do something it never intended: recreating the prefinancial crisis division between investment banks and commercial banks.


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