Volcker rule opponents are making their case for alternatives to the proprietary trading ban at a U.S. House Financial Services Committee hearing as regulators move closer to completing work on the Dodd-Frank Act measure.
Today’s hearing will be the last in this session of Congress on the impact of the restrictions for banks that benefit from federal deposit insurance and discount borrowing. Financial-industry representatives will argue for higher capital standards rather than the rule’s outright trading ban, according to testimony prepared for the hearing.
Efforts to finalize the multi-agency rules, which have taken more than a year so far, will be complicated the departure of Securities and Exchange Commission Chairman Mary Schapiro, who is stepping down tomorrow. No regulators are scheduled to testify at the House hearing.
“It’s obvious that since they haven’t put anything out they are having difficulty among the members of the ruling class in trying to decide what the outcome is going to be,” Tim Ryan, chairman and chief executive officer of the Securities Industry and Financial Markets Association, said in an interview yesterday.
The House committee scheduled the hearing after an August request from Representative Spencer Bachus, the Alabama Republican who leads the panel, for suggested alternatives to the Volcker rule. Most industry responses proposed higher capital standards instead of a ban.
The rule, which regulators first proposed in October 2011, drew 18,000 comment letters, many from banks complaining that it was too complex and could hurt economic growth. Named for former Federal Reserve Chairman Paul Volcker, who championed it as an adviser to President Barack Obama, is intended to prevent deposit-taking banks from putting depositors’ money at risk.
Regulators, who had said they expected to finish the rule by the end of the year now expect to complete their work early next year, according to Fed Chairman Ben S. Bernanke. The Fed is one of five regulators working on the measure.
“I think there is quite a bit of agreement -- I wouldn’t say a final agreement -- but quite a bit of agreement on key points among the regulators at this juncture,” Bernanke said at a news conference. “So it’s our intent to try to get this done early in 2013.”
Bachus and Representative Jeb Hensarling of Texas sent a letter to regulators on Nov. 29 requesting a delay of the rule’s effective date for two years after the final version is issued. They cited disagreements among regulators and a lack of transparency in the rule writing.