(snip)"Lawmakers agreed to a provision known as the "Volcker" rule, named after former Federal Reserve Chairman Paul Volcker, which prohibits banks from making risky bets with their own funds. To win support from Sen. Scott Brown (R., Mass.), Democrats agreed to allow financial companies to make limited investments in areas such as hedge funds and private-equity funds.

The move could require some big banks to spin off divisions, known as proprietary-trading desks, which make bets with the firms' money.

The bill also includes a provision, authored by Sen. Blanche Lincoln (D., Ark), which would limit the ability of federally insured banks to trade derivatives. This provision almost derailed the bill following vehement objections from New York Democrats. Ms. Lincoln worked out a deal in the early hours of Friday morning that would allow banks to trade interest-rate swaps, certain credit derivatives and others—in other words the kind of standard safeguards a bank would take to hedge its own risk.

Banks, however, would have to set up separately capitalized affiliates to trade derivatives in areas lawmakers perceived as riskier, including metals, energy swaps, and agriculture commodities, among other things."(snip)

(snip)"To pay for some of the new government programs, the bill would allow the government to charge fees to large banks and hedge funds to raise up to $19 billion spread over five years. The assessment is designed to eventually pay down a part of the national debt."(snip)


My acquaintances in the banking industry tell me that ...

- the prohibition against proprietary / commodity / derivatives trading will cost these financial institutions their main source of profits. Thus the financial institutions plan to respond to this prohibition by moving their proprietary trading / commodity trading / derivatives trading operations outside of the USA. This will mean a major loss of financial industry jobs in very large US cities where financial industry operations are concentrated ... particularly New York - and a corresponding gain in financial industry jobs in London, Brussels, Geneva, Singapore, Hong Kong etc.

- the new 'fees' being imposed will be passed on to bank customers in the form of higher loan interest rates and lower CD / money market interest rates.