Public interest groups get more time to review rewrite of Volcker Rule

PROPOSED CHANGES to the Volcker Rule stem from President Donald Trump’s efforts to ease banking regulations. / BLOOMBERG FILE PHOTO/ANDREW HARRAR

PROVIDENCE – Federal regulators are giving the public an extra month to review and provide input on proposed changes to the so-called “Volcker Rule” that stem from President Donald Trump’s directives to ease banking regulations.

The deadline for public comment has been extended to Oct. 17. The original comment period ran from July 17 to Sept. 17. A final version of the rewrite of the rule could be completed early next year.

The Volcker Rule was among the banking and financial-industry regulations adopted in response to the 2008 financial crisis. The rule, which took effect in 2015, bans proprietary trading by banks.

Five entities – the Federal Reserve, the Federal Deposit Insurance Corp., the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Office of the Comptroller of the Currency – share oversight and enforcement duties of the Volcker Rule.

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The rule prohibits certain forms of short-term trading by federally insured banks, to reduce risk to taxpayers and the world economy. In addition, it limits banks’ ability to buy and sell stocks, bonds, currencies and risky derivatives.

As currently written, the rule also directs regulators to determine if a trader is making certain trades for profits or to maintain market liquidity. And it requires banks to prove to regulators that certain short-term trading is permissible, or else it is assumed to be noncompliant.

A coalition of public interest groups had asked for more time to study the proposed rewrite.

“We are pleased that the federal banking regulators granted our request to provide the public with more time to comment,” said Dennis Kelleher, president and CEO of Better Markets, a nonprofit nonpartisan group founded in the wake of the financial crisis with the stated mission of promoting the public interest in the financial markets.

“The Volcker Rule was one of the most important financial reforms to be enacted in the ashes of the 2008 crash, not only because of those limitations but also because it curbed the gambling culture that had infected too much of the banking industry,” Kelleher said.

“The 2018 proposed changes to the Volcker Rule are very substantial, running 689 pages and containing 342 specific questions on technical concepts and provisions,” he added. “Yet the regulators initially provided a mere 60 days for comment to be filed.”

Scott Blake is a PBN staff writer. Email him at Blake@pbn.com.