Late last week, bank regulators gave financial markets and the financial services sector a badly needed shot in the arm. Contrasting the Federal Reserve’s restriction on dividend payments by U.S. banks, the FDIC and the OCC among other bank regulators (including the Federal Reserve) approved the roll-back of provisions to the Dodd-Frank Act (a.k.a. The Volcker Rule). In addition to reducing the amount of cash banks have to set aside as collateral against potential swap losses, it opened the door for them to invest in private equity funds (including venture capital) and credit funds. Flush with previously restricted cash and new investment mandates, this could signal a new era for the relationship between emerging FinTech companies and the financial institutions they count as clients and partners.
Image: Can banks manage their regained investment rights responsibly? © 2016 BLOOMBERG FINANCE LP
