America tears up rules that curbed casino banking

SHARES in the United States soared to record highs last night as American regulators took a first step towards overhauling banking rules hated by Wall Street.

The Dow Jones Industrial Average smashed through the 22,000 barrier for the first time – taking gains since Donald Trump was elected President last November to 20pc.

The Wall St benchmark closed at 22,016.24, up 52.32 points.

The milestone was reached as investors cheered stellar results from Apple as well as the prospect of reforms to a key piece of regulation brought in to protect the economy from a repeat of the casino banking tactics that brought on the financial crisis.

The Office Of The Comptroller Of The Currency ( OCC), which overseas America’s national banks, said it was seeking views on revising the so- called Volcker Rule.

The legislation – named after former Federal Reserve chairman Paul Volcker and introduced by Barack Obama – stops banks trading with their own money.

Its introduction, as part of the Dodd-Frank Wall Street Reform And Consumer Protection Act, was seen as crucial in preventing another financial crisis by curbing speculative and often risky trading by banks.

But it is reviled on Wall Street where opponents complain it hampers the growth of banks and the wider economy. President Trump has branded the legislation ‘a disaster’.

Bank bosses – such as Goldman Sachs chief executive Lloyd Blankfein – argue that it is impossible for regulators to work out what type of trading should be barred and what should be allowed under the rule. ‘In prac- tice, it’s been very cumbersome,’ Blankfein told Bloomberg TV yesterday. ‘It makes people on trading desks very nervous. It’s had a dampening effect on liquidity in the market place.’

In a sign that the regulation’s days are numbered in its current form, Keith Noreika, a lawyer appointed by Trump to lead the OCC, said: ‘A bipartisan consensus has emerged that the Volcker Rule needs clarification and recalibration to eliminate the burden on banks that do not engage in covered activities and do not present systemic risks.’

Treasury Secretary Steven Mnuchin, who has identified the Volcker Rule as one of his top targets to ease private sector regulation, said he has held discussions with regulators ‘on how the rule could be improved’.

‘I look forward to continuing to work with our banking and market regulators on modifying the rule,’ he added.

US shares have soared since Trump was elected – in part on hopes he will fulfil his promise to slash red tape across the economy to stimulate growth. The Dow hit the 20,000 mark in January and crossed 21,000 on March 1.