(Reuters) – Wall Street has been lashing out against the Volcker rule since it was proposed, but a senior Goldman Sachs executive said on Wednesday the trading restriction might actually help the investment bank’s profitability.
A harsh interpretation of the rule, which bans speculative trading by commercial banks, could help return-on-equity levels because banks would be able to demand more money from clients for executing trades, Goldman Sachs Group Inc Chief Financial Officer David Viniar said at a Credit Suisse conference in Miami.
“Regulation will undoubtedly bring about new ways in which the industry must manage its operations and deliver its services to clients,” Viniar said, but regulatory challenges “must be effectively navigated in order to provide shareholders with acceptable returns.”
Viniar did not provide a target for Goldman’s return-on-equity, but in a slide presentation he indicated that if Goldman were to exclude profits and losses from businesses affected by the Volcker rule from 2004 through 2011, the bank would have had the same average quarterly returns with less volatility.
Return-on-equity is a closely
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