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Merkley and Levin: Finish Stronger, Simpler Volcker Rule Without Delay

October 25, 2012

Washington, DC – Today,  Senators Jeff Merkley (D-OR) and Carl Levin (D-MI) called on regulators to end the delay in issuing a final version of the Volcker Rule. In a letter to Federal Reserve Chairman Ben Bernanke and other regulators, the Senators expressed frustration that months after the deadline has past, staff-level differences may be obstructing progress on removing the loopholes from earlier proposals and finalizing the rule. 

“As with any rulemaking, different agencies may have their own perspectives on various provisions,” the Senators wrote. “While we are cautiously pleased to see reports that a consensus is emerging, we are concerned that some ongoing staff-level differences may be obstructing progress.  The time for resolving those differences is long overdue.  We urge you to move quickly, make the final adjustments needed to simplify and strengthen the October 2011 proposal, and bring the process to a conclusion.”

The Senators also noted in the letter that we should not wait to implement the protections American families and businesses should be enjoying due to lack of unanimous agreement. 

“If, because of differing agency procedures or timelines, not all of you can finalize the rule simultaneously, so be it.  The statute was constructed with that possibility in mind.  We are confident that if the majority of you act, any remaining agency or agencies will soon follow suit.“ 

Senators Merkley and Levin were the lead authors of the Merkley-Levin provision of the Dodd-Frank Act, otherwise known as the Volcker Rule. The Volcker Rule is a firewall between traditional banking and hedge-fund style trading. The final rule was due two years after the law was passed, on July 21, 2012.

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October 25, 2012

Hon. Ben Bernanke

Chairman

Federal Reserve Board of Governors

20th Street and Constitution Avenue NW

Washington, DC 20551

Hon. Martin Gruenberg

Acting Chairman

Federal Deposit Insurance Commission

550 17th Street, NW

Washington, DC  20429

Hon. Thomas Curry

Comptroller of the Currency

Office of the Comptroller of the Currency

Administrator of National Banks

Washington, DC 20219

Hon. Mary Shapiro

Chairman

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

Hon. Gary Gensler

Chairman

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

 

 

Dear Sir or Madam:

The Merkley-Levin Provisions on proprietary trading and conflicts of interest, commonly referred to as the “Volcker Rule,” have been the law of the land for over two years.  Now, nearly four months past the deadline for it to go into effect, we call for an end to the delay in issuing its implementing regulations.

While American families and businesses should be enjoying the protection of the Volcker Rule, your agencies’ ongoing failure to implement these important protections has left them and our economy at greater risk of another financial crisis.  In the years since the law was passed, we have all seen a series of high-profile trading losses at banks and non-bank financial companies – instances where the Volcker Rule, if properly implemented, could have prevented significant losses that once again have undermined confidence in our markets and institutions. 

The U.S. Congress passed, and President Obama signed into law, the Merkley-Levin Provisions to ensure that banking institutions are in the business of taking deposits, making loans, and serving customers, and not in the business of making high-risk proprietary bets.  Until a strong Volcker Rule is firmly in place and meaningfully enforced, families, businesses, and investors will continue to doubt the U.S. commitment to Wall Street reform, and U.S. taxpayers will remain exposed to the dangers of high-risk trading and conflicts of interest by Wall Street’s largest firms.

As with any rulemaking, different agencies may have their own perspectives on various provisions.  While we are cautiously pleased to see reports that a consensus is emerging, we are concerned that some ongoing staff-level differences may be obstructing progress.  The time for resolving those differences is long overdue.  We urge you to move quickly, make the final adjustments needed to simplify and strengthen the October 2011 proposal, and bring the process to a conclusion.  The final regulations needed to implement the ban on high-risk trading and conflicts of interest should be issued without delay and no later than the end of the year, so that our financial institutions can speed the process of eliminating the risks and conflicts of interest that continue to endanger the U.S. financial system.

If, because of differing agency procedures or timelines, not all of you can finalize the rule simultaneously, so be it.  The statute was constructed with that possibility in mind.  We are confident that if the majority of you act, any remaining agency or agencies will soon follow suit.  As our economy continues to strengthen, it is critical that you do not further withhold the Volcker Rule protections from American families and businesses.  America is still feeling the effects of Wall Street’s bad bets.  We can ill afford to let reform stall now.

Sincerely,

 

cc:        Hon. Barack Obama, President of the United States

Hon. Timothy Geithner, Secretary of the Treasury

Hon. Paul Volcker

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