Excluding community banks from the requirements of the Volcker Rule – which generally blocks banks from proprietary trading and owning or sponsoring hedge or private equity funds – was proposed Friday by the three federal banking agencies and the two federal securities regulators.
The agencies are proposing to exclude banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5$ or less of total consolidated assets from the restrictions of the rule.
Additionally, according to the agencies, the proposal would (under certain circumstances) permit a hedge fund or private equity fund to share the same name or a variation of the same name with an investment adviser that is not an insured depository institution, company that controls an insured depository institution, or bank holding company. That provision is consistent with the regulatory relief legislation enacted last spring (the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), S. 2155).
The proposal was issued by the three federal banking agencies (the Federal Reserve, Federal Deposit Insurance Corp. (FDIC), and the Office of the Comptroller of the Currency (OCC)), and the securities regulators (the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The proposal will be subject to a 30-day comment period.