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Will restricting proprietary trading and stricter derivatives regulation make the US financial system more stable?

Author

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  • Jan Kregel

    () (Levy Economics Institute of Bard College)

Abstract

Two of the major provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed into law on July 21 2010, aim to reduce speculation with financial institutions own funds using highly leveraged derivatives. The so-called Volcker rule limits the ability to trade as principal in what is known as proprietary trading and the Lincoln Amendment or the push out rule limits derivatives dealing for regulated, insured banks. A complement to the Lincoln amendment requires that all over the counter derivatives be cleared through official mechanisms and traded on regulated exchanges similar to those used for commodities.

Suggested Citation

  • Jan Kregel, 2011. "Will restricting proprietary trading and stricter derivatives regulation make the US financial system more stable?," PSL Quarterly Review, Economia civile, vol. 64(258), pages 227-247.
  • Handle: RePEc:psl:pslqrr:2011:33
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9410/9305
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    References listed on IDEAS

    as
    1. Jan Kregel, 2008. "Minsky’s Cushions of Safety: Systemic Risk and the Crisis in the U.S. Subprime Mortgage Market," Economics Public Policy Brief Archive ppb_93, Levy Economics Institute.
    2. repec:reg:rpubli:569 is not listed on IDEAS
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    Cited by:

    1. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p4srjesb4 is not listed on IDEAS
    2. Maylis Avaro & Henri Sterdyniak, 2014. "Banking union: a solution to the euro zone crisis?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 193-241.
    3. Jan Kregel, 2013. "More Swimming Lessons from the London Whale," Economics Public Policy Brief Archive ppb_129, Levy Economics Institute.
    4. Alessandro Roncaglia, 2011. "Introduction," PSL Quarterly Review, Economia civile, vol. 64(258), pages 189-191.
    5. Carlo D'Ippoliti, 2012. "Josef Steindl: Introduzione: sulle cause reali della crisi finanziaria (Introduction: on the real causes of the financial crisis)," Moneta e Credito, Economia civile, vol. 65(260), pages 279-292.
    6. Mario Tonveronachi & Elisabetta Montanaro, 2012. "Financial re-regulation at a crossroads: How the European experience strengthens the case for a radical reform built on Minsky's approach," PSL Quarterly Review, Economia civile, vol. 65(263), pages 335-383.

    More about this item

    Keywords

    financial regulation; naked CDS; Volcker Rule; Dodd Frank; Lincoln Amendment;

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • G01 - Financial Economics - - General - - - Financial Crises
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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