As if we didn’t see this coming. The joint committee of the House and Senate is getting close to a compromise on the financial reform bill. Led by Congressman Barney Frank (D-MA) and Senator Chris Dodd (D-CT), the compromise appears to be dropping ‘The Volcker Rule’. Also, an amendment to regulate the derivatives market written by Senator Blanche Lincoln (D-AR) is being trashed as she is getting a special exclusion for Arvest Bank, located in Arkansas and owned by the Walton (Walmart) family, requiring minimal capital assets. The rule was intended to only exempt banks with less than $10 Billion dollars in assets, Lincoln wants it raised to $15 Billion.

The compromise bill will give Wall Street everything they want. Investment banks will be able to operate as they have been and get an added bonus. The banks will now be able to allow banks to sponsor and invest in hedge funds. J.P. Morgan bank is wasting no time as they have entered negotiations to acquire the Brazilian hedge fund, Gavea.

The newest member of the Senate, Scott Brown (R-MA) hasn’t wasted any time either in getting deals for banks in his state. Brown is on board for dumping the Volcker Rule as it would hurt banks like State Street, BNY Mellon and others. The Volcker Rule would have placed new restrictions on banks which offer financial services such as stock and mutual funds to customers. The rule would also encompass insurance companies and non-bank mutual funds.

Many experts see the over-leverage investment instruments that were offered and sold by banks and other Wall Street firms as a primary cause for the financial crisis and Crash of 2008. The Volcker Rule would have banned banks from trading with their own capital and running hedge funds. Adopted in the Senate version of the financial reform bill, it has become a major issue as a compromise is sought with the House of Representatives.