* Regulators have been "less than transparent," lawmakers
* Republicans say banks should have 2 years to comply with
By Emily Stephenson
WASHINGTON, Nov 29 Two influential Republican
lawmakers on Thursday asked U.S. regulators to delay the
effective date of the controversial ban on proprietary trading
known as the Volcker rule, which financial regulators are still
The 2010 Dodd-Frank law charged five financial regulatory
agencies with crafting the rule to prevent banks from making
speculative trades with their own money.
But the final version of the rule, which was named for
former Federal Reserve Chairman Paul Volcker, who pushed for the
ban, has been delayed amid disagreements among the agencies and
lobbying from banks.
Representatives Spencer Bachus, of Alabama, who is the
chairman of the House of Representatives Financial Services
Committee, and Jeb Hensarling, of Texas, who has been selected
to lead the committee next year, said regulators must explain
how they will implement the rule and give banks more time to
comply once it is released.
"Unfortunately, you have been less than transparent about
how you intend to implement the Volcker Rule, and the resulting
confusion has only made it that much more likely that whatever
final rule you issue will compound the regulatory uncertainty
that continues to plague our economy," they said in a letter.
"We respectfully suggest that the Federal Reserve Board
delay the Volcker rule's effective date until two years after
the date on which the final rule is promulgated," they said.
Many bank critics have blamed proprietary trading for
exacerbating the 2007-2009 financial crisis. They say the
Volcker rule would curb excessive risk-taking by banks that
receive government backstops such as deposit insurance.
Banking groups counter that the rule would cramp liquidity
and could hit parts of their business that are not as risky.
The proposed rule covers trades in securities, futures and
commodity forwards, or contracts to buy or sell a certain amount
of a commodity at a particular point in the future.
The Fed, the Federal Deposit Insurance Corp, the Office of
the Comptroller of the Currency, the Securities and Exchange
Commission and the Commodity Futures Trading Commission were
supposed to finalize the Volcker rule earlier this year.
But regulators still have not released a final version. In
April, the Fed said banks would have until July 2014 to comply
and that it could extend the deadline if needed.
Officials have indicated that they hoped to finish the rule
by the end of the year, but industry observers now say it could
be pushed back into 2013.
Proponents of the ban have urged regulators to finish the
rule as soon as possible.
Senators Jeff Merkley and Carl Levin, the Oregon and
Michigan Democrats who authored the Volcker rule provision in
Dodd-Frank, last month told regulators to release a final rule
in 2012, even if only three of the five agencies approve it.
Bachus and Hensarling on Thursday asked regulators not to
split up, saying that competing versions of the rule from
different agencies would confuse banks and that regulators must
"speak with one voice" to comply with Dodd-Frank.
The Financial Services Committee plans to hold a hearing on
Dec. 13 to hear from the industry on the potential effects of
the Volcker rule.