Dodd-Frank and the Volcker Rule

The Law of Unintended Consequences is alive and well because of politics. The Volcker Rule, named after a suggestion by the former Federal Reserve  head and then Obama administration adviser, was instituted into the Dodd-Frank Act of 2010 to see that banks not trade bonds on their own behalf. That was supposed to safeguard the banking industry from speculation that could undermine the system. As with similar politically-inspired legislation, it’s now clear that just the threat of imposing the Volcker Rule is drying up corporate bond liquidity and is becoming a potentially dangerous market concern,  So much so that private entities are getting involved in making a market for such bonds, Moreover, there was never a real problem that past bank trading was creating the risk the politicians thought were present.(See the Earl J. Weinreb NewsHole® comments.)