Wall Street is entering an uncertain new era as the Volcker Rule â€" the regulation at the heart of Washington’s efforts to rein in financial risk-taking â€" takes hold, Ben Protess and Peter Eavis report in DealBook. The rule, a copy of which was reviewed by The New York Times, imposes some requirements that are tougher than the banks had wanted. Five federal agencies are expected to vote to approve it on Tuesday â€" though some might do so in private because of inclement weather in the Washington area. (One of them, the Commodity Futures Trading Commission, has canceled its public meeting.)
The Volcker Rule has become a litmus test for the overall strength of the Dodd-Frank financial overhaul law. And yet some critics say that the rule, which aims to draw a line between everyday banking and Wall Street trading, does not go far enough. Regulators agreed to delay it until July 2015. Wall Street, for its part, is expected to scour the rule for loopholes and consider whether to challenge it in court.
The rule bans banks from trading for their own gain, a practice known as proprietary trading. “In recent weeks, regulators who favored a more stringent version of the rule pressed for changes that they think will make it harder for banks to evade the regulation. The version of the rule reviewed by The Times shows that, in some areas, the hard-liners got their way,†Mr. Protess and Mr. Eavis write. “The rule, for example, includes new wording aimed at the sort of risk-taking responsible for a $6 billion trading loss at JPMorgan Chase last year.â€
The Volcker Rule also requires chief executives to attest that they have established programs for complying with the rule. “The C.E.O. of the banking entity must, annually, attest†to regulators that the bank “has in place processes to establish, maintain, enforce, review, test and modify the compliance program,†according to the copy reviewed by The Times, which is dated Friday. An October 2011 draft of the rule did not include such a mandate.
“But it could have been even tougher,†according to the DealBook report. “Some critics of Wall Street wanted the executives to attest that their bank was actually in compliance with the rule, not just taking steps to comply.â€
MANDELA’S FREE MARKET LEGACY  | “When you think about Nelson Mandela, you probably think about freedom â€" free people, free country, free speech. What may be overshadowed by Mr. Mandela’s extraordinary legacy was his complicated journey to support free markets and a free economy,†Andrew Ross Sorkin writes in the DealBook column. When he was released from prison in 1990, Mr. Mandela said he believed in the nationalization of South Africa’s main businesses, but two years later he changed his mind, embracing capitalism, and charted a new economic course for his country.
“The story of Mr. Mandela’s evolving economic view is eye-opening: It happened in January 1992 during a trip to Davos, Switzerland, for the annual meeting of the World Economic Forum. Mr. Mandela was persuaded to support an economic framework for South Africa based on capitalism and globalization after a series of conversations with other world leaders,†Mr. Sorkin writes.
HOW VIRTUAL CURRENCY POSES LEGAL CHALLENGES  | “Bitcoin itself is neither good nor bad, just a new means to conduct business, but virtual currency operates in ways that make it harder to prosecute violations,†Peter J. Henning writes in the White Collar Watch column. “The value of the Bitcoins available now is quite small, totaling approximately $12 billion. Yet the perception that growing acceptance of virtual currencies will change the way business operates means governments will have to figure out how to deal with new forms of crime.â€
“There is a Wild West quality to Bitcoin, created out of a libertarian bent that connotes a world beyond government regulation. Like any currency, it carries with it a degree of anonymity, much as the phrase ‘cash is an orphan’ signals that money can be largely untraceable once put into circulation. More than ordinary cash, though, Bitcoin operates largely outside the current banking system, making it even more difficult to trace transactions.â€
ON THE AGENDA  | The Senate is expected to vote on the nomination of Melvin L. Watt to lead the Federal Housing Finance Agency as soon as today. The Senate Banking Committee holds a hearing on housing finance reform at 2:30 p.m. The Labor Department’s Job Openings and Labor Turnover Survey for October is released at 10 a.m. Gary Gensler, chairman of the Commodity Futures Trading Commission, is on Bloomberg TV at 9 a.m. Kenneth M. Jacobs, the chief executive of Lazard, is on CNBC at 11:45 a.m.
U.S. SELLS LAST OF G.M. STOCK  | The government bailout of General Motors came to a close on Monday with the Treasury Department’s announcement that it had sold the last of what was once a 60 percent stake in the company, Bill Vlasic and Annie Lowrey report in DealBook. The sale allows the nation’s biggest automaker to continue its comeback without the stigma of being known as “Government Motors.â€
Taxpayers lost about $10 billion on their $49.5 billion investment in the automaker. But over all, taxpayers have ended up in the black on the crisis-related bailouts, Treasury officials said, recovering $433 billion from the Troubled Asset Relief Program after initially investing about $422 billion. “With the final sale of G.M. stock, this important chapter in our nation’s history is now closed,†Treasury Secretary Jacob J. Lew said.
Volvo to Sell Machine Rental Business for $1.1 Billion  | The Volvo Group, the Swedish truck and equipment maker, has agreed to sell its construction machinery rental business to the private equity firm Platinum Equity. DealBook »
Big Savings Promised in Food Merger  | Sysco’s acquisition of US Foods shows how investors are eating up synergies, notes Robert Cyran, a columnist for Reuters Breakingviews. REUTERS BREAKINGVIEWS
Editors of AllThingsD Are Said to Reach Deal With NBCUniversal  | Bloomberg News reports: “AllThingsD editors Walt Mossberg and Kara Swisher, who are leaving News Corp. at the end of the year, completed a deal with NBCUniversal for a news and conference business that will bring their current staff to a newly named website, according to people familiar with the matter.†BLOOMBERG NEWS
Airline Merger Is Complete  | The AMR Corporation and the US Airways Group announced on Monday the completion of their merger, which takes AMR out of bankruptcy and creates the American Airlines Group. DealBook »
Credit Suisse Moves Star Analyst to Investment Banking Side  | Howard Chen, a senior analyst at Credit Suisse who followed exchanges, brokerages and other institutions, will become an investment banker advising clients in the sector he once covered. DealBook »
Nomura Plans to Hire Bankers in the U.S. Â |Â The Japanese brokerage Nomura Holdings plans to hire about 20 investment bankers in the United States as part of an effort to reclaim market share in mergers and acquisitions, Bloomberg News reports. BLOOMBERG NEWS
Buffett Talks to M.B.A. Students  | A professor took notes on a meeting in November that Warren E. Buffett held with 20 M.B.A. students from eight universities. DAVID KASS
Lloyds Sells Remaining Stake in Wealth Manager  | Reuters reports: “Lloyds Bank boosted its capital by 685 million pounds ($1.1 billion) through the sale of its remaining stake in wealth manager St James’s Place, raising expectations it can start paying dividends again.†REUTERS
For Doormen, Holiday Tips and Colleagues’ Curiosity  | Just as bankers furtively compare year-end bonuses, doormen in New York are sometimes brimming with curiosity about their colleagues’ tips, Vivian Yee writes in The New York Times. “It’s no different with doormen than it is with hedge fund managers,†said Thomas, a doorman who once worked as an information technology technician for Deutsche Bank. NEW YORK TIMES
When Activist Investors Are Met With Open Doors  | “I’m even surprised,†Carl C. Icahn told The Wall Street Journal. “Being admitted to all these boards without a proxy fight would have been unthinkable only a year ago.†WALL STREET JOURNAL
China Everbright to Try Again for Public Offering  | The midsize state-owned bank has begun a week of marketing for a Hong Kong I.P.O., after market downturns scuttled two previous tries; it hopes to raise $2.8 billion. DealBook »
Twitter Investors Cheer New Ad Products  | Shares of Twitter rose more than 9 percent on Monday as investors bet the company would be able to make more money from advertising. REUTERS
Snapchat Files for Restraining Order  | Snapchat, the ephemeral picture messaging start-up that has become one of the most sought-after businesses in the technology industry, filed for a temporary restraining order against Frank Reginald Brown, who says he came up with the idea for the company, Reuters reports. REUTERS
Swiss Bank Valiant to Cooperate With U.S. on Tax Inquiry  | Reuters reports: “Valiant Holding AG has become the first Swiss bank to say it would work with U.S. officials in a crackdown on wealthy Americans evading taxes through hidden offshore accounts. The Swiss regional bank said it would participate in the scheme brokered by the two countries’ governments because it could not say definitively that all its U.S. clients paid their taxes.†REUTERS
With the Volcker Rule, the More Regulators the Merrier  | The Volcker Rule may be a great example of how having multiple regulators may create a patchwork of regulations, but also provide important backstops, David Zaring writes in an Another View column. DealBook »
Ex-Deutsche Bank Employee in Hong Kong Sentenced to Prison  | Ma Sin-chi, a former Deutsche Bank managing director in Hong Kong, was sentenced to seven years in prison for accepting bribes and was ordered to pay about $3.7 million to the bank, The Financial Times reports. FINANCIAL TIMES
