Overall, important steps were taken in an effort to strengthen and enhance the regulatory framework and accountability of financial institutions. However, the success of this legislation entirely depends on how well regulatory authorities implement the new requirements. There is, for example, a provision called the Volcker Rule, which will limit a large firm’s ability to set up speculative activities.
So-called “proprietary” trading and the sponsorship of hedge funds that engage in higher-risk activities must be done outside of commercial banks and bank holding companies, away from direct access to insured funds and the Federal Reserve’s discount window. This is an important provision.