WASHINGTON (Reuters) - A federal banking regulator officially opened the Volcker Rule up for review on Wednesday, soliciting public comment on revising and easing the regulations that aim to bar risky profit-seeking trading by banks with federally insured deposits.
Keith Noreika, the acting U.S. comptroller of the currency, announced he was soliciting public comment, specifically input on how to better define what activities are prohibited by the Volcker Rule.
The Office of the Comptroller of the Currency is one of five regulators charged with writing and enforcing the rule, a major component of the 2010 Dodd-Frank financial reform law. It is accepting comments for 45 days.
Officials in both parties have said the existing rule, which bans risky proprietary trading by banks, is too complicated and may benefit from a second look. Noreika’s move is the first formal step by any regulator to begin the process of rewriting the regulations.
Since its creation, large banks have lamented the Volcker Rule, arguing that it is practically impossible for regulators to discern what type of trading is barred while other activity, such as market-making, remains acceptable.
“In practice it has been very cumbersome, very hard to do,” Goldman Sachs CEO Lloyd Blankfein said in an interview with Bloomberg TV on Wednesday. “It makes people sitting on trading desks very, very nervous.”
But advocates for a tougher rule argue curbing risky trading by banks is critical to preventing crises.
Noreika is only filling in at the top of the Office of the Comptroller of the Currency until President Donald Trump’s full-time nominee, Joseph Otting, is confirmed by the Senate, potentially this fall.
The OCC said it is seeking input on ways to better implement the existing rule, without going through the lengthy and complicated process of rewriting the regulation.
Treasury Secretary Steven Mnuchin has identified the Volcker Rule as one of his top targets in the administration’s efforts to ease private sector regulation. As head of the Financial Stability Oversight Council, Mnuchin has pushed other financial regulators to reconsider the current rule, which was finalized in 2013.
In its June report reviewing financial rules, the Treasury recommended changes to the current rule, including exempting banks with less than $10 billion in assets and easing compliance requirements.
The OCC’s request is aimed primarily at federal banks the agency directly monitors. The Federal Reserve, Federal Deposit Insurance Corporation, Commodity Futures Trading Commission, and Securities and Exchange Commission are equal stakeholders with the OCC in administering the Volcker Rule, which was named after former Fed Chairman Paul Volcker.
Editing by Bernadette Baum and Bill Trott