WASHINGTON — The incoming and outgoing chairmen of the House Financial Services Committee are urging banking regulators to delay implementation of the Volcker Rule until 2015.
It's unclear when the rule, which bans proprietary trading and is named after former Federal Reserve Board Chairman Paul Volcker, will be finalized. A proposal issued last year has garnered more than 18,000 public comments and was widely derided as too complicated. Regulators have already blown past a July 2012 completion date mandated under Section 619 of the Dodd-Frank Act as they seek to figure out how to proceed.
In the letter, Chairman Spencer Bachus, R-Ala., who will step down from his post at yearend, and Rep. Jeb Hensarling, R-Texas, who was just selected to take over the panel, are urging that the rule not go into effect until two years after a final version is promulgated.
"Given the time that it will take for you to agree on one version of the Volcker Rule as well as the tremendous uncertainty that market participants face in trying to anticipate what the final rule will look like, we respectfully suggest that the Federal Reserve Board delay the Volcker Rule's effective date until two years after the date on which the final rule is promulgated," the lawmakers said in their Thursday letter to the heads of the Fed, Federal Deposit Insurance Corp., Commodity Futures Trading Commission, Securities and Exchange Commission and the Office of the Comptroller of the Currency.
Regulators have said they plan to issue a final rule by the end of this year, but that timeframe is highly unlikely, pushing compliance under a two-year delay out to sometime in 2015 at the earliest.
Bachus and Hensarling also ask regulators to conduct a cost-benefit analysis of the rule, and warn the agencies that they should issue just one version.
"Market participants deserve to know whether the Volcker Rule will in fact make the financial system safer and they deserve to know at what cost. Perhaps more important, Congress should have the benefit of that analysis in considering whether Section 619 should be amended or repealed," the letter says.