By Sarah N. Lynch
WASHINGTON Nov 22 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
"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
"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
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
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
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
"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."