After a three year wait (over a year beyond the deadline mandated by the Dodd-Frank Act), a consortium of U.S. regulators released the final Volcker Rule. Under the rule, banks will be prohibited from engaging in proprietary trading and from owning more than a three percent stake in hedge funds and other private funds.
The rule does allow banks to engage in underwriting of securities, market-making for their customers and hedging for “risk mitigation.” A good chunk of the 881 pages and 2833 footnotes is devoted to spelling out the specifics of these exemptions.
The rule becomes effective April 1, 2014, but banks will have until July 2015 to comply.
Though it took three years to write the final rule, many are saying that was the easy part. The hard parts will be enforcing the rule and surviving the inevitable legal challenge. Check out the new rule, view the documents, a summary and links to more info on MarketsReformWiki:
Also, see the stories below for lots more opinion, analysis and statements from regulators.
Volcker Rule Analysis, Commentary & More
‘Long and Arduous Process’ to Ban a Single Wall Street Activity
PETER EAVIS – NYTimes.com
At 6 feet 7 inches, Paul A. Volcker struck an imposing figure as chairman of the Federal Reserve during the economically turbulent 1980s. But the banking rule named after him, approved on Tuesday, may not have the same sway over an unwieldy global financial system.
Volcker Rule: Reaction from Volcker, Obama, Washington and Wall Street
WSJ Staff – MoneyBeat – WSJ
Tuesday’s final approval of the long-debated Volcker rule, which places new restrictions on bank trading, sparked celebration from supporters and warnings from critics. But it also brought relief and even, from some quarters, a welcoming of opportunity. Here is a sampling of the reaction Tuesday.
Volcker Rule Gets It (Mostly) Right
The immediate goal of the Volcker rule, which U.S. regulators approved after a troubled four-year gestation, is to end speculative trading by banks. It also has a larger ambition — to tame the culture of excessive risk-taking that had Wall Street in its grip by 2008.
Misbegotten Volcker Rule Can Still Do Good
Stephen Mihm – Bloomberg
Long debated and long-awaited, the Volcker rule is being hailed as the 21st-century equivalent of the Depression-era legislation known as the Glass-Steagall Act.
Volcker Rule Makes Taxpayers ‘Safer, If Not Safe,’ Barofsky Says
Paul Vigna – MoneyBeat – WSJ
The Volcker rule will make taxpayers “safer, if not safe,” Neil Barofsky, the former special inspector general of the TARP program and author of the book “Bailout,” said on Tuesday’s MoneyBeat show.
How to Make Sure the Volcker Rule Survives in Court
Eric A. Posner and E. Glen Weyl – Bloomberg
Vocal opposition from banks didn’t stop U.S. financial regulators from approving the so-called Volcker rule, which bans proprietary trading. Yet the real threat to the rule never came from Wall Street. It is coming from the courts. Unless regulators can defend the rule based on principles of economics, it could go down in flames.
The Volcker rule cites the Occupy Movement 284 times
The world hasn’t heard much from Occupy Wall Street lately. But one branch of it, Occupy the SEC, has remained very busy — filing amicus briefs, testifying before Congress, suing regulators and writing comment letters, including a 325-page opus on the Volcker Rule. After quickly taking stock of how it turned out Tuesday, they gave the final version a “C-“. Occupy’s Akshat Tewary and Eric Taylor explained what problems they still have with it.
SEC Commissioner Says Regulators Not Given Time To Review Volcker
Andrew Ackerman – MoneyBeat – WSJ
Regulators weren’t given enough time to review the final version of the Volcker rule and were under “intense pressure” to meet an “utterly artificial, wholly political” year-end deadline to complete the regulation, said Daniel Gallagher, a Republican member of the Securities and Exchange Commission, who is expected to oppose the final rule.
Rules Restricting Bank Proprietary Trading Passed by Five Federal Agencies: An Initial Review
Gary DeWaal and Associates LLC
Despite a winter snowstorm that shut down the US Government in Washington DC, five federal agencies issued rules today (December 10) to implement the so-called Volcker Rule under the Dodd Frank law enacted in 2010.
Citigroup: Documentation of Trades Will Be Key Part of Volcker
Shayndi Raice – MoneyBeat – WSJ
Citigroup Inc. Chief Financial Officer John Gerspach said details around banks’ documentation of trades are an important part of new rules approved by regulators Tuesday.
Agencies Issue Final Rules Implementing the Volcker Rule
Five federal agencies on Tuesday issued final rules developed jointly to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”).
CFTC cross-border guidance was not a dodge, says ex-staffer
Peter Madigan – Risk.net
Controversial cross-border guidance issued by the Commodity Futures Trading Commission (CFTC) in July was not an attempt to avoid checks on the agency’s power – as a lawsuit filed last week by three industry associations claims – according to a former CFTC staffer, who worked on the text.
Adoption Of The Volcker Rule – SEC Chair Mary Jo White
Statement Of Support Of CFTC Chairman Gary Gensler On Volcker Rule
Statement On The Volcker Rule: Reducing Systemic Risk By Banning Excessive Proprietary Trading With Depositors’ Money – SEC Commissioner Luis A. Aguilar
Statement Of CFTC Commissioner Mark Wetjen On The Volcker Rule
Statement Regarding Adoption Of Rule Implementing The Volcker Rule – SEC Commissioner Kara M. Stein
Dissenting Statement Of CFTC Commissioner Scott D. O’Malia – Prohibitions And Restrictions On Proprietary Trading And Certain Interests In, And Relationships With, Hedge Funds And Private Equity Funds
Dissenting Statement Regarding Adoption Of Rule Implementing The Volcker Rule – SEC Commissioner Daniel M. Gallagher
Statement Regarding Adoption Of Rule Implementing The Volcker Rule, Commissioner Michael S. Piwowar, U.S. Securities And Exchange Commission, Dec. 10, 2013
“High Roller’s Room” – Statement Of CFTC Commissioner Bart Chilton
Statement by the President on the Volcker Rule