U.S. investment banks continue to work around recently instituted regulations restricting them from putting their own capital into short-term investments: The institutions are sidestepping the so-called Volcker Rule by making direct purchases of securities, companies and properties, which are considered longer-term investments, the Financial Times reported.

Goldman Sachs (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) are among large financial institutions using this loophole in the Volcker Rule, which was designed to reduce the chances of another financial meltdown by preventing banks from risking their own money in short-term trades, the newspaper said. Many banks have cut back or eliminated their so-called "proprietary trading" operations because of the new regulations.

Banks make so-called "principal investments" in longer-term assets because they continue to bring returns and is "a good business," the Financial Times said, citing a senior Wall Street banker it didn't identify.

While such investments have helped banks boost profits in recent years, they also helped lead to the financial crash, according to the newspaper. Lehman Brothers' 2008 bankruptcy was largely a result of its investment in the $23.6 billion leveraged takeover of property owner Archstone, the Financial Times notes.

Bank representatives declined to comment on the investments, according to the Financial Times.



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Bill

Why are you people bitching after all peons know nothing. I have told you befor this will happen and now it has, so shut up and kiss my ass you morons. Yeah i'm looking for someone with balls enough to stand up and fight but i surely won't find one in his country too many lazy bastards who whine and do nothing.

November 11 2010 at 7:22 PM Report abuse +1 rate up rate down Reply
Miss Lisa Troup

I knew there would be a loophole for the Buggers!!!..LOL!!!They just can't stop skinning us alive!!!LOL!!!..We need the 28th ammendment to seperate Corporations and STATE,and end to campaign finance(BRIBES)and Lobbying(The jerks that work to get these loopholes put in).....Or we are SUNK!!!....O;)

November 11 2010 at 7:03 PM Report abuse rate up rate down Reply
jspfarm

Of course though, the politicans had to leave them some loopholes, they have to protect those campaign contributions.

November 11 2010 at 5:11 PM Report abuse +1 rate up rate down Reply
jspfarm

Anybody surprised that the banks have already found a way around the "new regulations"? Once again, another example of this administrations failed policies, next up, health care...

November 11 2010 at 5:10 PM Report abuse +1 rate up rate down Reply