I had to research this, I found out it is a section of the Dodd–Frank Wall Street Reform and Consumer Protection Act. Proposed by an American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from making certain kinds of speculative investments that do not benefit their customers. He understood that the banks speculative activity played a big part of the 2007-2010 financial crisis.
Thanks. The reason I asked this is because I think this is going to be one of the next big conflicts in congress and I want to creat an awareness of what it's about. The bank lobbyists are already trying to change the ruling in favor of their interests. I'm thinking about doing a hub about this as the issue comes more into focus.
Yes, I feel it is criminal for the banks to "speculate" on their own loans defaulting. They puopously refuse renegotiate the loans for the customers, forcing ytcustomer to loose the property, then win big on the speculation!
Very true. That would be a mistake. We would some day be back in another recession. The MF Global bankruptcy is an example of why the Volcker rule is important to keep our major banks from gambling us into another crisis.
The banksters have time and again proved that they are untrustworthy. Unregulated, they will continue to find ways of screwing their customers. Here's one example which I personally experienced 20 or so years ago with Chase Manhattan Bank:
If it hasn't happened to you, it has happened to someone you know.
You get a letter from your mortgage servicer informing you that because your homeowners insurance has lapsed, the company has bought insurance for you. You can't help wondering why they didn't just go to Prudential or State Farm, because the policy you've been sent covers less and costs three to 10 times the market rate.
Regulators finally are taking a closer look at this "force-placed" hazard insurance, Gretchen Morgenson reports in The New York Times. Regulators from New York state's Department of Financial Services have subpoenaed records from insurance agents, brokers, insurance companies and loan servicers.