The U.S. Federal Reserve said on Thursday that it would extend until July 2017 the deadline for banks to divest ownership in some legacy investments and to end relationships with funds prohibited under the Volcker Rule. The rule, passed as part of the Dodd-Frank law in 2010, is intended to prevent taxpayer-backed banks from making bets on Wall Street for their own benefit. It prohibits insured banks and any of their subsidiaries from engaging in proprietary trading and from owning or affiliating in any way with a hedge fund or private equity fund. The rule was not finalized until 2013 and originally delayed for the first time in 2014 after banks said they could suffer big losses if they had to sell the stakes in a hurry. This is the final extension that the Fed is authorized to grant.
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