Not 24 hours after the republican victory, Spencer Bachus (r) Alabama, is urging regulators not to rigidly implement the Volker rule. Back to republican big business as usual
From the Wall Street Journal:
Bachus Urges Regulators Not to Rigidly Implement Volcker Rule
By DEBORAH SOLOMON
WASHINGTON-—Rep. Spencer Bachus, the Alabama Republican competing for the reins of the House Financial Services Committee, warned regulators not to "rigidly" implement a new rule aimed at curbing banks' risk-taking ability, saying it will impose "substantial costs" on the economy.
.Mr. Bachus's opposition to the Volcker rule, named after former Federal Reserve Chairman Paul Volcker who also is an Obama administration adviser, isn't new but his comments have taken on importance given the committee's role in overseeing many of the regulators who will define its scope. Already, some Republican lawmakers are suggesting they will seek to influence the rules that must be written as part of the financial-regulatory overhaul passed this year through frequent oversight of regulators and by potentially squeezing agency budgets.
The Volcker rule sought to prevent banks from putting a firm's capital at risk by prohibiting proprietary trading and banning certain relationships with hedge funds and private-equity funds.
In a letter to regulators, Mr. Bachus said proprietary trading "had virtually nothing to do with the crisis." He wrote it is "therefore doubtful that the Volcker Rule will make the U.S. financial system any more stable" and warned it would place U.S. firms at a competitive disadvantage with global peers who aren't subject to the same restrictions.
More
Document: Bachus' letter on Volcker Rule
.Regulators are discussing how best to implement the provision, which was written broadly and leaves much to the interpretation of the Federal Reserve, the Securities and Exchange Commission and other agencies that must jointly study and implement it. Among the most critical tasks will be defining certain activities, such as "market making-related activities," which are exempted under the law.
Mr. Bachus didn't provide specific recommendations on how to define such activities but said regulators should consider banks' bottom lines when determining how strictly to write the rules. He said the Volcker rule "will remove a primary source of income diversification for U.S. institutions."
His view is in contrast to that of many Democrats, as well as Mr. Volcker. In a letter to regulators this week, Mr. Volcker said regulators need to limit banks' ability to exploit loopholes by writing concise definitions while also giving broad latitude to examiners.
The new Financial Stability Oversight Council, which is led by the Treasury Department and comprises various regulators, is required under the law to study the Volcker rule and provide recommendations on its implementation by the end of January. Regulators then have another nine months to write the actual rules.
Last month, the council solicited public comment on the rule, and submissions are due by the end of Friday.
Original Post