Regulation of the year: The Volcker Rule

Rules to carry out Paul Volcker's namesake regulation will likely be approved Tuesday. (Gerald Martineau/The Washington Post)

It took a shockingly long time to craft (three years). It is mind-bogglingly complex (71 pages of regulations). It is being phased in slowly (compliance required by July 2015). But now the provision of the Dodd-Frank Act meant to stop too-big-to-fail banks from engaging in speculative trading activity has the full force of law. It is tougher, and with fewer loopholes, than many financial reform advocates had thought plausible just a year ago.

As Mike Konczal writes, the rule's completion was helped along by a few things. The London Whale trading scandal at JPMorgan showed how even the best-run banks can record billions of trading losses if they are allowed too free a hand; Treasury secretary Jack Lew has pledged that the final rule would prevent a major bank from engaging in that type of activity in the future. Bipartisan pressure against the big banks from Capitol Hill helped energize regulators to craft a strong Volcker Rule, as did outside advocacy groups that engaged with zeal in commenting during the the regulation-writing process.

Giant banks will surely again find a way to get themselves in trouble. But the Volcker Rule rule has ended up as a strongly crafted set of restrictions about some of the activities that could most easily endanger the financial system.