Bank stocks surge after regulators ease Volcker Rule, JPMorgan Chase climbs 2%


The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, April 26, 2020.

Jeena Moon | Reuters

U.S. banking regulators are about to ease restrictions created in the aftermath of the financial crisis, a development that sent bank stocks surging Thursday. 

Officials from the Federal Deposit Insurance Commission said on a call that they are loosening the restrictions from the so-called Volcker Rule, allowing banks to more easily make large investments into venture capital and similar funds. The companies will also be able avoid setting aside cash for derivatives trades between different affiliates of the same firm, potentially freeing up billions of dollars in capital for the industry. 

Shares of major banks, including JPMorgan, Citigroup and Morgan Stanley, were trading more than 2% higher for the session following the announcement. 

The move is in line with the Trump administration’s broad push to roll back regulations put in place by previous leaders. While the banking industry has acknowledged the benefits of being required to hold more capital to cushion losses, lobbying groups and individuals including JPMorgan Chase CEO Jamie Dimon have criticized parts of the post-financial crisis regulatory regime as being overly restrictive or redundant. 

The FDIC and the Office of the Comptroller of the Currency are set to vote on the rule changes, and the Federal Reserve must also sign off on it, according to Bloomberg, which reported on the move. 

—With reporting from CNBC’s Wilfred Frost. 

This is a developing story. Check back for updates.

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