UPDATE 1-U.S. SEC's Stein calls for stronger final Volcker rule
By Sarah N. Lynch
WASHINGTON Nov 22 (Reuters) - A top U.S. regulator who is a crucial swing vote to adopt the Volcker rule to ban proprietary trading by banks expressed some disappointment on Friday about the contents of a final draft, saying she hopes it will be strengthened.
"To be clear, the rule we are evaluating now is not the rule I would have written," Securities and Exchange Commission Democratic member Kara Stein said in remarks before the American Bar Association.
"My hope is that when it comes time to vote on it, that the rule will be strong enough and faithful enough to Congress' direction, that I will be able to support it."
Stein's comments come at a crucial time for U.S. regulators.
Five agencies, including the SEC, three banking regulators and the Commodity Futures Trading Commission, are all trying to put the finishing touches on the rule and hope to vote on it in December, people familiar with the matter have said.
Banks have staunchly opposed the rule as proposed, saying it will eat away at their bottom line and make it too hard for them to engage in legitimate "market making" activities that are crucial to maintaining healthy and liquid markets.
Officials at the SEC and the banking agencies over the past few years have been trying to agree on how the final Volcker rule should distinguish between market making and proprietary trading.
People familiar with the matter have previously said that these differences have narrowed greatly.
But in recent weeks, both Stein and CFTC Chairman Gary Gensler have been raising concerns internally about whether the final rule will be tough enough, a person familiar with the matter previously told Reuters.
Prior to serving as an SEC commissioner, Stein worked for Rhode Island Senator Jack Reed, a prominent Democrat on the Senate Banking Committee and one of the leading architects of the 2010 Dodd-Frank Wall Street reform law.
In that role, she helped craft legislative language for the bill.
One of Stein's counsels at the SEC is also a former aide to Michigan Democratic Senator Carl Levin, one of the two leading lawmakers responsible for getting the Volcker rule into Dodd-Frank.
Stein did not discuss which parts of the Volcker rule she may have concerns with during her speech, and declined to speak with reporters afterwards.
However, she did express optimism about the ultimate outcome.
"All of the financial regulators are working hard to make sure that the rule does what it is supposed to do," she said.
"It will be done."