Recall that the Volcker Rule was intended to bar banks with insured deposits from making large and risky trading bets. The rule was lawmakers’ attempt to reinstate some of the taxpayer protections lost when Congress gutted the Glass-Steagall Act in 1999.

But the big bank crowd contends that regulators have overreached. At a January hearing convened by the House Financial Services Committee, Jeb Hensarling, a Texas Republican who is its chairman, called the Volcker Rule a job destroyer that “will harm numerous of our capital markets: equity, joint ventures, C.D.O., venture capital and especially the C.L.O. market.”

Last month, that House committee passed a bill introduced by Andy Barr, a Kentucky Republican, containing a provision that would allow banks to own riskier types of C.L.O.s. Mr. Barr contended that small banks in his state would suffer layoffs if they had to divest those assets.

“This constant effort to get around the rule limiting banks’ investment in hedge funds, on behalf of a few institutions who apparently want room to resume the financing practices that got us into trouble in the past, really should end,” Mr. Volcker said in a statement last week. “My sense is that the C.L.O. market has recovered within the boundaries of the existing rule.”

Mr. Volcker is right. Issuance of these instruments, strong last year, is even stronger now. Through April 16, over $32 billion in C.L.O.s have been issued this year, up from $29 billion during the same period last year, according to S&P Capital Insight’s Leveraged Commentary & Data. In March, issuance of C.L.O.s was the highest in any month since 2007 and April is on track to being the biggest month ever.

So much for the notion that the new rule will shut down the C.L.O. market and hurt the companies that tap it. Note, too, that most of the recently issued instruments contain only loans and, therefore, conform to the restrictions imposed on banks by the Volcker Rule. Sharp investor interest in these securities indicates that abiding by the rule will not wreak havoc in the market.

And what of the argument that small banks will incur crippling losses when forced to sell their C.L.O. holdings under the Volcker Rule? Not true. Small banks simply don’t own large amounts of this paper.