Volcker Rule Reprieve

On May 30 the Federal Reserve Board approved provisions to simplify the Volcker Rule. The revisions keep the core of the Volcker Rule intact and continue to prevent banks from trading with depositors’ money. The rule, which was enacted as part of the 2010 Dodd-Frank law, took five regulatory agencies more than three years to write.

After five years of experience the agencies have proposed a three-tiered approach that places the heaviest burden on those with the highest volume of trading and the highest risk. The recently enacted Economic Growth, Regulatory Relief and Consumer Protection ACT completely removes certain smaller institutions included in the bottom tier. A separate rule making will deal with this later issue.

The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the U.S. Securities and Exchange Commission, and the U.S. Commodity Futures Trading Commission are expected to take similar action in the next few days. Once all of the agencies have approved the proposal, the notice with be published in the Federal Register with a 60-day comment period.

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