* Banking groups want more time to comment on proposal
* Wall Street opposed proprietary trading ban
By Dave Clarke
Dec 1 Large U.S. banks are asking regulators
for more time to comment on a proposed rule to implement a ban
on proprietary trading that Wall Street bitterly opposes.
In a Nov. 30 letter to regulators, lobbying groups
representing the banks said the so-called Volcker rule was so
complex that the comment period should be extended beyond the
Jan. 13 deadline. The proposed rule was released in October.
"Our members are deeply concerned about the potential
impact of the proposal on capital formation, markets and
liquidity for a range of asset classes and on the safety and
soundness of banking entities and the businesses in which they
engage," said the letter, which was signed by the American
Bankers Association, the Financial Services Roundtable, the
Securities Industry and Financial Markets Association, the
Financial Services Forum and the Institute of International
The groups, which represent banks such as JPMorgan Chase , Bank of America and Goldman Sachs , sent
the letter to the Federal Reserve, the Federal Deposit
Insurance Corp, the Office of the Comptroller of the Currency
and the Securities and Exchange Commission.
The groups said the Commodity Futures Trading Commission
had yet to release a proposal on the part of the ban it would
be responsible for enforcing.
They asked the regulators to extend the comment period for
90 days beyond Jan. 13 or for 60 days after the CFTC releases
its proposal, whichever comes later.
The Volcker rule would prevent banks that receive
government backstops like deposit insurance from making risky
trades with their own funds in securities, derivatives and
other financial products. It was named for former Fed Chairman
Paul Volcker, who championed the measure.
The rule was included in the 2010 Dodd-Frank financial
oversight law, enacted in response to the 2007-2009 financial
The rule would also prohibit banks from investing in or
sponsoring, beyond a small amount, hedge funds or private
The Obama administration has pushed back against attempts
to slow down implementation of any part of Dodd-Frank.
"If these efforts to weaken reform are successful, then
consumers will be more vulnerable to future abuse, businesses
will be more vulnerable to future contractions in credit
availability caused by financial mistakes, and the economy will
be more vulnerable to devastating crises," Treasury Secretary
Timothy Geithner said in a speech on Thursday addressing
financial reform in general. He did not specifically mention
the Volcker rule.