Frank Releases Statement Regarding Implementation of the Volcker Rule
Congressman Barney Frank, Ranking Member of the House Financial Services Committee, today released a statement regarding the implementation of the Volcker Rule.
The Volcker Rule is a provision of the Wall Street Reform and Consumer Protection Act which would prohibit banks and their affiliates from conducting proprietary trading – speculative investments for their own profit in hedge funds, private equity funds, and other investment vehicles.
According to the financial reform law, the specific language of the Volcker Rule will be jointly determined by the Federal Reserve, the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Commodities Futures Trading Commission (CFTC.) Those institutions released a proposed rule in October of last year. Since then, they have received thousands of formal comments. The regulators will consider the comments before issuing a final rule.
Given the complexity of the rule and the enormous number of comments, it is expected that regulators may not be able to meet the deadline mandated in the financial reform law for putting the rule into effect. The deadline is the earlier of two years after enactment of the law or one year after issuance of the final rule – so it is effectively July 21st of this year.
Because of the upcoming deadline and in order to reduce uncertainty by institutions which will be covered by the rule, Frank issued today’s statement calling for regulators to issue formal guidance on its implementation, specifically for the period between the July 21st deadline and the date on which a final rule is issued. The specifics of his request can be found in the attached statement.