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US regulator estimates Volcker Rule’s cost for banks

A U.S. bank regulator on Thursday said the Volcker Rule could cost the industry a one-time annual charge of up to $4.3 billion, the first cost estimate by a regulator for the ban on banks betting on markets with their own money.

The rule, which takes its name from former Federal Reserve Chairman Paul Volcker, puts a stop to so-called proprietary trading by banks. It also limits their ability to invest in hedge funds and private equity funds.

The U.S. Office of the Comptroller of the Currency, which regulates nationally chartered banks, estimated the Volcker Rule's cost at between $413 million and $4.3 billion. These would be one-time costs taken in one year, the OCC said.

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Banks with assets greater than $10 billion will bear the brunt of the cost, the bank regulator said, but seven smaller banks will also be affected.

The U.S. Chamber of Commerce said last month that bank regulators appeared to have failed to meet their obligation to fully study the Volcker Rule's cost to the economy, creating a possible cause for a legal challenge.

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