We can only speculate about the real purpose for the Volcker Rule. 

It is generally acknowledged that proprietary trading did not cause or contribute to the Great Recession. Furthermore, the rationale that banks should not be allowed to use insured deposits to engage in high-risk speculative trading is misleading because depositories were never allowed to do that under laws predating the Volcker Rule by decades. The real target of the rule, presumably, is the trading activities of bank affiliates.

Some think Paul Volcker really intended to restore the original intent of the 1956 Bank Holding Company Act: isolate banks from every other form of commerce.  The Volcker Rule would do that by making it such a nuisance to be affiliated with a bank that only a shell holding company would do it. Some lawmakers may have supported the Volcker Rule in reaction to the scandal surrounding a securities firm using its proprietary trading desk to bet against securities it was selling to some of its clients.

I think the best case for the rule is to prevent a bank affiliate from engaging in activities that pose a risk to the affiliate's solvency when that is a risk to the bank as well. The London Whale is a case in point. If enough bad trades had been made to bankrupt the holding company, it could cause a run on the bank even if it is otherwise solvent.

Regulators have a legitimate interest in overseeing investing activities that threaten a bank. The biggest problem with the regulators' proposal to put the Volcker Rule into practice is that it goes much further than needed to provide this oversight.  Its excessive, almost punitive, reach is one of its biggest flaws.

Here are two changes that would accomplish legitimate goals with much less confusion and disruption.

For the full BankThink piece see "Simplify Volcker Rule to Focus on Real Risks"