Question

The Maloney Act contains the co called Volcked Rule, which prohibits depository banks from proprietary trading.

a. True.
b. False.

Answer 1

Answer:

a.True.

The maloney Act contains the co called volcked rule,which prohibits depository banks from proprietary trading.The important reason explain as bellow:

1. The volcked rule first proposed by president obama on jan 21,2010.The main objective of this rule is prohibiting the proprietary trading and investing in private equity fund, hedge fund etc.it seeks to make limited liability.
2. The volcked rule protects the customer of the bank.it's not allowing the banks to do private investment,which leads the financial crisis.
3. The rule which discourage the bank willingness because the bank unnecessarily takes the extra risk to earn profit which is in otherside not suitable for customer.so its prohibits propreitary trding.
4. The rule which intend to prohibits the large bank from too big to fail.its impact our economics.so the rule hepls to make the situation under control.
5. When the rule being implemented the all banks get safe because the bank will perform in a safety manner.Simply accept the deposit and provide loans.The works of intermidiator perfofmed in a effective way.The bank being happy with their small profit margine and all hope if anything went wrong the govt will help them.
6. As per the rule the bank or any institution can go for certain investment activities which is no more risk which protect the institution.The institution always maintain corporate compliance and do internal audit.
7. The institution before going for investment they need to awere about size,scope,risk,complexity etc which makes bank confident.