NEW YORK (AP) -- Bank stocks shot higher Friday after an agreement on a financial regulation bill reassured investors that new rules won't devastate financial companies' profits.
Banks outdistanced the rest of the market after congressional negotiators agreed on a bill that increases the regulation of financial companies, but that doesn't include some of the harshest provisions that the government originally proposed. The legislation imposes new rules on the complex investments known as derivates, but the rules aren't as strict as investors feared.
It also includes a far milder version of what's been called the Volcker rule. That rule, named after former Federal Reserve Chairman Paul Volcker, would have banned commercial banks from trading simply to increase their profits, a practice known as proprietary trading.
Investors have feared that intense regulation would devastate bank profits. Now, the market seems to believe that financial companies would do well even with the new limits on their business.
