Last week a group of about 100 CEOs asked the Obama administration to slash a number of Dodd-Frank provisions expected to roll out in July. The main criticism–and also the loudest throughout the industry–focused on the Volcker Rule. This is not the first attack on the maligned rule, but it does come at a time when the SEC is considering starting from scratch. These CEOs join other members of the financial industry urging the demise of the Volcker Rule. That, combined with the 17,000 comments received by the regulators, have forced back the rule’s implementation date.
The crux of Volcker turns on its ban of banks trading with their own money (or with their own “trading accounts”), rather than client money. The rule would apply to proprietary trading by U.S. banks no matter where the trading occurred–even outside the United States. Non-U.S. banks would have Volcker obligations as well, but only as to their proprietary trading in the U.S. or involving a U.S. resident. The complaints about the rule run the gamut–relating, for example, to the leeway given to regulators to broaden the scope of key terms, such as “trading accounts,” and to the restrictions on banks’ ability to own or acquire an interest in, or sponsor, hedge funds or private equity funds.