Reference no: EM13293999

Paul Volker, an 85 year old former Chairman of the Fed was heavily involved in writing portions of the Dobb-Frank Financial Reform legislation, especially those parts that had to do with the capital reserve requirements of commercial banks. Before the legislation went into effect these capitals reserve accounts had to be in the neighborhood of 2 to 3% of assets. The so-called Volker Rule, as it was known in banking circles was to be set at about 10%. The final legislation was passed at 5%. Please discuss the role of bank capital in risk management and the pros and cons of having higher then lower capital requirements.