The Latest Development And Influence Of American Financial Regulation Rules

The US subprime mortgage crisis erupted in2008and the following global financialcrisis were warnings to the excessively loose global financial regulation at that time.Those crises promoted the principled changes of legislation practice in financialregulation. In July2010, President Obama signed the “Dodd Frank Act”, aiming atimproving the safety of the U.S financial system. The most famous and disputedSection619of the Act is the Volcker Rule, which named after Paul Volcker, theformer Federal Reserve Chairman. In December2013, the final rule of the VolckerRule was officially adopted and implemented after repeated comments anddiscussions for two years and a month.An important reform focus of the Volcker Rule is to set a broad limit to bankingentities of proprietary trading or investment as well as sponsor of private equity andhedge funds, which help banking entities to clearly draw a line between traditionallending business and related high risk investments. The implementation of VolckerRule deeply influences the financial Industry in US, even the whole world. Theimpact is significant especially in the business model and the market environment ofcommercial banking Industry. At the same time, the Volcker Rule provides valuablereference to legislation and practice of financial regulation in China as well.This article is divided into four parts. Firstly the paper introduces the historicalbackground of Volcker Rule and describes the status, cause and process of it in thecontext of global regulation development in detail, showing the profound historicalbackground and urgent need of Volcker Rule. Secondly, the paper describes thespecific content of the Volcker Rule. Then the paper illustrates the Volcker Rule’simportance in the global financial governance, pointing out the fact that the rule hasaffected the ecology and environment of global financial institutions to a great extent.In the last part, the paper briefly introduces the Volcker Rule and its enlightenment aswell as suggestions on China’s financial supervision.