Proposals to revise ‘Volcker rule’ expected by late May, Comptroller tells group

Comptroller of the Currency Joseph Otting (right) discusses banking regulation with the U.S. Chamber’s David Hirschmann.

Proposed revisions to the “Volcker rule” – which prohibits banking firms from engaging in proprietary trading or entering into certain relationships with hedge funds and private-equity funds – will be unveiled by the end of next month, the regulator of national banks told a Washington audience representing businesses from around the nation.

Comptroller of the Currency Joseph Otting told the U.S. Chamber of Commerce audience Thursday that federal banking regulators expect to unveil the revisions to the rule “around the end of May.” He gave no further details.

The Volcker rule was adopted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). In addition to regulatory changes, Congress is also considering altering the law. The Volcker Rule Regulatory Harmonization Act (H.R. 4790) would give the Federal Reserve Board sole rulemaking authority over the provision, exempting most “community banks” (those with assets up to $10 billion) from the rule. 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.

A similar provision is included in the Senate’s regulatory relief legislation, S. 2155.

In other comments at the U.S. Chamber event, Otting extolled regulatory relief efforts taken by his agency (and other financial regulators). “Good changes are happening in terms of regulatory change” that will benefit small business, he told the group, largely made up of business leaders.

He also told the group:

  • Cryptocurrency has the potential to go mainstream; he compared the use of the electronic currency to his trading “when I was a kid” of marbles for baseball cards “with my buddy.”
  • The Office of the Comptroller of the Currency (OCC) is working with the Financial Crimes Enforcement Network (FinCEN) “to alleviate some of the regulatory burden.”
  • The banking industry (referring to it as “our industry”) is “perhaps the best it’s been in history, with historic levels of capital and best risk-management practices.”