The Securities and Exchange Commission and federal
banking regulators have extended the comment period on the Volcker Rule
proposed regulations from January 13, 2012 to February 13, 2012. In Release No.
regulators noted that the extension of the comment period is appropriate "due
to the complexity of the issues involved and to facilitate coordination of the
rulemaking among the responsible agencies as provided in section 619 of the
Dodd-Frank Act." The proposed rule was released in October. The Volcker Rule is
scheduled to go into effect July 21, 2012.
The extension's Release cites comment letters from the Center for Capital
Markets Competitiveness of the U.S. Chamber of Commerce (November 17, 2011);
Association et al. (November 30, 2011); and Representative Neugebauer
(R-TX) (December 20, 2011). The ABA letter points out the 1400 questions asked
in the proposed regulations.
The Dodd-Frank Act put the Volcker Rule in place to
restrict the ability of bank and non-bank financial companies to engage in
proprietary trading and to limit their ability to have interests in, or
relationships with, a hedge fund or private equity fund. The concept is
simple, but difficult in execution. All banks and financial institutions engage
in some form of proprietary trading to hedge the risks in their loan
portfolios. Add in the extensive use of securitizations. Sprinkle in the
decision by the remaining Wall Street firms to become bank holding companies
after the 2008 crisis to get part of the bailout. Whip it all up with the
difficulties in defining a non-bank financial company.
Feel free to add handfuls of industry lobbying to the
mix, depending on your level of cynicism. For example, Representative
Schweikert is asking the regulators to exclude venture capital investing under
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
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