Otting hails Volcker Rule revamp, says final rule still protects banking system

Revisions adopted by two banking agencies Tuesday to the the Volcker Rule, which was put in place generally to prohibit proprietary trading and involvement with hedge funds by certain large banking organizations, will simplify the rule while preserving the safety and soundness of the banking system, Comptroller of the Currency Joseph Otting said Tuesday.

Otting, during Tuesday’s open Federal Deposit Insurance Corp. (FDIC) Board meeting, noted that he had already approved of a similar final rule earlier that morning. The rule was approved by the FDIC Board, on which Otting sits, on a vote of 3-1 (with Board Member Martin Gruenberg voting against).

“After extensive comment and feedback through the rulemaking process, I am pleased to approve changes to the ‘Volcker Rule’ that simplify the rule in a common-sense way that preserves the safety and soundness of the federal banking system and eliminates unintended negative consequences of the prior rule,” Otting said in his statement released Tuesday by the OCC.

Otting, in his statement, said banks took “important steps” after the financial crisis to recapitalize their balance sheets, restore liquidity, and improve their risk management “in responsible ways,” and he stated that national banks and federal savings associations “exited the behaviors and practices that some saw as threats to the insured deposits.” The final rule, he said, preserves limits and protections of the prior version of the Volcker Rule “to ensure inappropriate risk practices do not recur.”

The final rule needs the approval of five agencies before it will be published in the Federal Register. In addition to the FDIC and OCC, those include the Federal Reserve Board, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).

Comptroller of the Currency Approves Volcker Rule Reforms