I Know Nothing, But Citi Might Know A Lot
I'm loathe to lead a blog post by admitting ignorance, but here goes: I don't know if the financial reform bill that emerged today would ban banks from sponsoring in-house private equity funds. The original House and Senate language included such a ban, under the Volcker Rule rubric. The result likely would have been that banks like Goldman Sachs, Merrill Lynch and J.P. Morgan would have been required to divest existing operations (probably via a combination of management spinouts and secondary sales). But it's being suggested that the restrictions was stripped from the amended bill, which doesn't seem to yet be publicly available (thus my ignorance). Instead, the only relevant language may be that banks -- or certain banks, thanks to some weight-throwing by State Street lobbyist Sen. Scott Brown -- can't invest more than 3% of their capital into PE or hedge funds.
