WASHINGTON — The head of the Federal Deposit Insurance Corp. signaled Thursday that regulators are receptive to extending the comment period on a proposal to revise the Volcker Rule.
“I believe we’re open to an extension,” FDIC Chairman Jelena McWilliams said in public remarks around the agency’s release of the Quarterly Banking Profile.
Before McWilliams was sworn in this June, the FDIC and four other agencies
But banks have raised objections with the proposal. The Wall Street Journal recently reported on a meeting where industry representatives urged the Federal Reserve Board to change certain aspects or risk unintended consequences.
The current comment period for the proposal expires on Sept 17. Banning proprietary trading at banks was first proposed following the crisis by former Fed Chairman Paul Volcker.
“That rule is going through its comment period and as such we are not in a position to comment on any outcomes,” McWilliams said.
McWilliams was also asked about a separate
The FDIC had opposed the plan under former FDIC Chairman Martin Gruenberg, arguing that it would significantly reduce the amount of Tier 1 capital institutions would have to hold. The Fed and OCC’s plan would replace a static ratio with a dynamic ratio that is a specific to a bank’s risk profile.
McWilliams did not comment on the leverage ratio plan specifically, but said she is reviewing past agency policies.
“That proposal was out before I joined the FDIC. I am more than willing to take a look at everything we’ve done in the past and reassess where the agency is,” she said.
She also spoke on efforts by the banking agencies to develop an updated policy on Community Reinvestment Act compliance.
“The Community Reinvestment Act has not been revised in a long time and the world of banking has changed significantly,” McWilliams said. “As the landscape of banking and financial services changes over the years, I’m not sure that the demands of the communities have been necessarily adequately addressed by the existing regulations.”
McWilliams also reiterated her view that the FDIC is legally charged with processing applications for industrial loan companies, a limited-purpose charter exempt from bank holding company rules that is available to nonfinancial firms. ILC approvals have been at a virtual standstill for over a decade since a controversy erupted over Walmart’s bid for a charter, which the retail giant ultimately withdrew.
“Certainly, ILCs are the law of the land, and so long as that stands, the job of this agency is to process those applications,” McWilliams said.
