Five of U.S. financial regulators announced Tuesday they were allowing additional time for the public to comment on a proposal to ease the “Volcker Rule,” one of the financial industry’s most-hated restrictions which imposes a prohibition on risky proprietary trading by Wall Street banks.
The Fed Board, CFTC, SEC, FDIC and the Office of the Comptroller of the Currency, all previously approved the legislation in 2013, said the public would now have until October 17 to weigh in on the matter, after setting an initial September 17 deadline on submissions.
The regulators in July proposed reducing the overly complex requirements that entirely ban proprietary trading by banks with a more streamlined set of rules.
The proposal reflects the widespread agreement that material changes to the controversial regulation would be inevitable, in a bid to streamline bans on specific types of bank trading put in place after the 2007-2009 financial crisis.
Named for former Fed Chairman Paul Volcker, the rule is meant to stop some of the risky banking practices that contributed to the economic meltdown.
The regulation makes it illegal for big banks to use their customer’s deposits, through government-insured loans, to make speculative, risky bets.
However, the industry is too complex that it blocks needed market liquidity vehicles and prompting lenders to go too far in retreating from markets.
Trump is translating campaign rhetoric into reality
The Fed is taking the lead in revising the restrictive rule and making it more friendly to banks. The draft proposes changes that cancel the so-called “60-day rebuttable presumption,” which want to give firms more freedom to trade and soften constraints on their ability to hold positions for 60 days or less. The current rules look at such short-term holdings as the kinds of activity the Volcker was intended to discourage in a bid to prevent banks from triggering another financial meltdown.
Trump is once again . The president made repealing the Dodd-Frank act one of his campaign’s focal points.
However, the timing of an actual replacement for Dodd-Frank remains unclear as only Congress can rewrite the legislation. But between now and the possible passage of overhauling legislation, Trump has been able to make many changes without involving lawmakers by and ordering them to ignore most of the Dodd-Frank rules.
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