Banks Find Loophole in New Regs

As President Obama announced a significant new assault on big Wall Street banks today—saying he would propose a set of reforms forbidding banks from owning, investing in, or sponsoring funds or trading operations unrelated to serving customers—the same banks that would be affected by those rules think they may have already found a loophole. By claiming that its hedge fund investments or trading operations are "related to serving customers"—either by allowing outside clients to invest in the funds or treating their own employees as customers in the hedge funds—the banks believe that less than 1 percent of their overall business will be affected.