On Thursday, five federal regulatory agencies voted to roll back a key financial rule enacted following the 2008 financial crisis. The change will make it easier for banks to invest in venture capital and will tweak some restrictions on bank investing in hedge funds and private equity—all forms of riskier investing that Congress limited after 2010.

The revised rule will also shrink the financial cushion that banks are required to keep on hand during certain types of derivatives trading. This particular change could free up an estimated $40 billion of capital for banks to trade with.

Sheila Bair, who served as chairman of the Federal Deposit Insurance Corporation during the financial crisis, told CNBC that she believes the changes are “ill-advised” because “that $40 billion that will no longer be in banks to protect them” will expose the government to more risk. 

Called the Volcker rule, the original version of this regulation has long been one of the most controversial parts of the Dodd-Frank Act, a sweeping package of Wall Street reforms enacted after the 2008 crisis and the bailout that stabilized the financial […]