The FDIC is now permitting banks to invest in illiquid venture capital funds. Apparently banks don't need that extra liquidity since the Federal Reserve will ensure those pesky bank runs are a thing of the past. That's so 2008!
The FDIC’s decision to ease the Volcker Rule could prove to be a boon for some startups, freeing up banks to invest tens of billions of dollars in high-risk venture capital funds that specialize in fast-growing fledgling companies.
Bank stocks surged on the news, which will free financial institutions (FIs) to pump as much as $40 billion into venture capital funds, a move that supporters say will boost growth among small businesses and startups and create badly needed jobs.