The Federal Deposit Insurance Corp. and the U.S. Federal Reserve Board voted unanimously to approve the rule that was a component of the Dodd-Frank financial overhaul law, a massive regulatory revision that came about as a reaction to the 2008 financial crisis that triggered the worse recession since the Great Depression.
"As part of this Wall Street reform, we fought to include the Volcker Rule -- a rule that makes sure big banks can't make risky bets with their customer's deposits," President Barack Obama said in a White House statement.
"The Volcker Rule will make it illegal for firms to use government-insured money to make speculative bets that threaten the entire financial system and demand a new era of accountability from CEOs who must sign off on their firm's practices," Obama said.
The Wall Street Journal reported Comptroller of the Currency Thomas Curry approved of the 1,000-page rule on which he voted twice: once as the comptroller of the currency and once as a board member of the FDIC.
"During 2014, we will develop the necessary examination procedures and training to ensure that our bank examiners have the tools they need" to police the new policies, Curry said in a statement.
Commodity Futures Trading Commissioner Bart Chilton said he supported the rule once it became tough enough. The final document was "solidified tightly to avoid loopholes," Chilton said.
Economics Professor Peter Morici at the University of Maryland said the rule would serve the country well if it forces banks to put their efforts into making loans that will bring returns to the bank, rather than making risky loans and then insuring those loans with derivatives, which, during the financial crisis, compounded the problems and magnified the losses.
Fed Chairman Ben Bernanke said banks would have until mid-2015 to comply with the new rule but many large banks have already made adjustments, the Journal reported. As such, stocks for many financial firms were higher on Wall Street Tuesday.
Bank of America Chief Executive Officer Brian Moynihan said at an investor meeting in New York Tuesday BofA had already made most of the changes needed to comply.
"That's not a big part our company," he said.
"We'll have to work through it, but in the end if we serve our customers, there's a business there," he said.