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| Press Release |
For Immediate Release | Contact: Jeff Emerson (202-226-1490), Marisol Garibay (202-226-2467)
August 7, 2012 |
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Chairman Bachus Seeks Public’s Input on Volcker Rule Alternative
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WASHINGTON - Financial Services Committee Chairman Spencer Bachus is asking investors, industry professionals and the public to offer their ideas and suggestions on how to formulate a less burdensome legislative alternative to the Volcker Rule.
“If regulators implement the Volcker Rule in its current form, the repercussions will be devastating to our economy. It will undermine our nation’s ability to compete and make it harder for Main Street businesses to raise capital so they can grow and create jobs. Therefore, we must consider legislative alternatives that will not stifle economic growth and job creation,” said Chairman Bachus.
Chairman Bachus has set a deadline of September 7 for the Committee to hear from interested parties. The deadline will give members of the Financial Services Committee the opportunity to evaluate the comments and legislative recommendations in preparation for a hearing that is being planned for the fall.
“Our committee has conducted its oversight of the Dodd-Frank Act by seeking out and listening to those who are affected by its regulations. We’ll do the same in this process of developing a better legislative alternative to the Volcker Rule,” said Chairman Bachus, noting that the Committee has heard from more than 370 witnesses during 65 hearings on the consequences of Dodd-Frank.
Section 619 of the Dodd-Frank Act -- popularly known as the Volcker Rule after its chief proponent, former Federal Reserve Chairman Paul Volcker -- prohibits U.S. bank holding companies and their affiliates from engaging in “proprietary trading” and from sponsoring hedge funds and private equity funds. While the idea sounds simple, regulators have had great difficulty writing the Volcker Rule since there is no bright line that separates “proprietary trading” from “market making,” which enables companies to raise funds by issuing equity, or bonds, notes and commercial paper.
In October 2011, federal financial regulators issued a joint notice of proposed rulemaking to implement the Volcker Rule. In a clear sign of the trouble regulators are having, their joint proposal runs 300 pages and asks more than 1,300 questions of market participants on nearly 400 topics. Sheila Bair, the former chairman of the Federal Deposit Insurance Corporation, called the result “a 300-page Rube Goldberg contraption of a regulation.”
Many of the 16,000 comment letters the regulators received in response to their proposal express concerns about the Volcker Rule’s negative impact on market liquidity, pension plans and retirement accounts.
Since the Volcker Rule was not proposed by President Obama until after the House had already passed its version of the financial regulatory bill that eventually became Dodd-Frank, the upcoming hearing will be the Committee’s first opportunity to consider legislative alternatives, said Chairman Bachus.
Those wishing to submit legislative recommendations can do so by emailing them to the Committee at volckeralternative@mail.house.gov.
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