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{
    "pk": 47410,
    "title": "<!--StartFragment-->\nPlaying by the Volcker Rule: How Deregulation Threatens the Firewall Between Banks and Risk\n<!--EndFragment-->",
    "subtitle": null,
    "abstract": "<p>The Volcker Rule’s Covered Fund Provision, enacted under the Dodd-Frank Act in 2013, was designed to separate traditional banking from speculative investment activities to safeguard financial stability and delineate the roles of distinct segments within the financial system. In 2020, financial regulators compromised this regulatory firewall by excluding venture capital and credit funds from the provision’s restrictions, allowing banks to serve as investors, sponsors, and working partners. This paper critiques the 2020 modification through a combination of legal and regulatory analysis. I will first examine the foundational purpose and structure of the original Volcker Rule. Then, I will interpret the statutory definitions, treatment, and risk profiles of venture capital and credit funds. Together, these analyses support the paper’s primary contention that the 2020 modification failed on two core fronts: contradicting the original legislative intent of the Volcker Rule and reintroducing systemic vulnerabilities by enabling banks to invest in high-risk, illiquid, and speculative funds. Reinstating an uncompromising definition of covered funds and creating a clear separation of federally insured banks from speculative investments will be critical to maintaining systemic financial stability and preserving systemic resilience from future crises.</p>\n<p> </p>\n<p><br><!--EndFragment--></p>",
    "language": "eng",
    "license": {
        "name": "Creative Commons Attribution 4.0",
        "short_name": "CC BY 4.0",
        "text": "Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.\r\n\r\nNo additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.",
        "url": "https://creativecommons.org/licenses/by/4.0"
    },
    "keywords": [
        {
            "word": "Volcker Rule"
        },
        {
            "word": "Banking Regulation"
        },
        {
            "word": "Covered Funds"
        },
        {
            "word": "Covered Fund"
        },
        {
            "word": "Dodd-Frank Act"
        },
        {
            "word": "Venture Capital Funds"
        },
        {
            "word": "Credit Funds"
        },
        {
            "word": "Financial Regulation"
        },
        {
            "word": "Bank Sponsorship"
        },
        {
            "word": "Post-Crisis Regulation"
        },
        {
            "word": "systemic risk"
        }
    ],
    "section": "Article",
    "is_remote": true,
    "remote_url": "https://escholarship.org/uc/item/1q94v8g1",
    "frozenauthors": [
        {
            "first_name": "Joshua",
            "middle_name": "Skyler",
            "last_name": "Kao",
            "name_suffix": "",
            "institution": "",
            "department": ""
        }
    ],
    "date_submitted": "2025-05-13T11:32:45.469000-07:00",
    "date_accepted": "2025-05-13T23:01:17.365000-07:00",
    "date_published": "2025-05-20T20:00:00-07:00",
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        "type": "pdf",
        "path": "https://journalpub.escholarship.org/ucsdulr/article/47410/galley/35816/download/"
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}