Investors hoping for strict enforcement of the new Volcker Rule guarding against risky proprietary investing by big banks shouldn't hold their breath.
The Volcker Rule, part of the Dodd Frank reforms inspired by the financial crisis, restricts U .S. banks from making certain kinds of speculative investments that do not benefit their customers. The rule's provisions are scheduled to be implemented on July 21, 2012.
However, Wall Street interests are fighting to weaken the proposed rule through intense lobbying efforts, vastly outgunning investors and their advocates.
A new Duke University study by Professor Kimberly D. Krawiec, based on agency records, determined that 94 percent of meetings between regulators and private interests regarding the Volcker Rule were arranged by financial institutions and their law firms -- while only six percent of such meetings involved public interest groups and unions. The intensity of industry lobbying should make investors everywhere feel nervous about the final product of the rulemaking process.