House gives thumbs up to ‘Volcker rule’ exemption and exclusive Fed rulemaking

A bill giving the Federal Reserve Board sole rulemaking authority over the so-called “Volcker rule,” exempting most “community banks” from the provision, was adopted by the House Friday on a vote of 300-104.

The Volcker rule (part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 [Dodd-Frank]) is intended to prohibit banking firms from engaging in proprietary trading or entering into certain relationships with hedge funds and private-equity funds.

The legislation, the Volcker Rule Regulatory Harmonization Act (H.R. 4790), sponsored by Rep. French Hill (R-Ark.), would exempt banks with up to $10 billion in consolidated assets from requirements of the rule. However, for those institutions still subject to the rule, the Fed would have exclusive authority to promulgate related regulations. Primary federal regulators would retain examination and enforcement authority.

The bill is similar to a provision of the Senate-passed S. 2155 as well (now pending in the House) and the previously House-passed H.R. 10, the Financial CHOICE Act.

H.R.4790 – Volcker Rule Regulatory Harmonization Act