Dem senators call for release of Volcker Rule enforcement data

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WASHINGTON—Three Democratic Senators are calling on federal regulators to release data and metrics to show the impact that the Volcker Rule has had on banks’ activity.

Sens. Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio and Jeff Merkley of Oregon said improving transparency around how the Volcker Rule is enforced would be of the public interest given the “need to understand the impact of the Volcker Rule in light” of changes the regulators have proposed surrounding the rule.

“To that end, we respectfully but urgently request that you share with Congress quantitative data and metrics demonstrating banks’ activities under the Volcker Rule, along with the agencies’ standards used to demonstrate compliance, the penalties for non-compliance, and banks’ success or failure at achieving compliance,” the senators said in a letter to the heads of the Federal Reserve, Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Commodity Futures Trading Commissions and the Securities and Exchange Commission.

“This should include the seven factors that banks are required to report to the agencies for each trading desk, along with a description of how frequently examiners at the agencies have used the quantitative metrics to date, including how metrics are used to evaluate compliance with the Volcker Rule,” the senators added.

The letter is another signal from progressive Democrats that they are firm in their backing of provisions of the Dodd-Frank Act, including the Volcker Rule, which bans proprietary trading at banks.

Regulators recently proposed adjustments to the compliance process, how prohibited trades are defined and tailoring for institutions with different trading volumes, among other things.

The senators said they were concerned that the plan that the regulators put out lacked data or analysis.

“It is worth noting that the Notice of Proposed Ruling (NPR) is devoid of any data or analysis that provides support to many of the significant policy changes included in the NPR,” the senators wrote. “Indeed, many of the more than 1,000 questions posed in the NPR are not readily answerable without access to Appendix A data, except perhaps by the banking industry itself.”

The senators said they believe the release of the data could be done in a way that quells financial institutions’ concerns about revealing confidential information.

“There are undoubtedly multiple ways to avoid any such problems, including delaying the release of the data, withholding the name of the institution at which the trading desk is located, or aggregating data in such a way as to address confidentiality concerns,” the letter says.

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