Monday, September 10, 2012

Banking Industry Urges Congress to Fully Repeal the Volcker Rule Provisions of Dodd-Frank

In a letter to House Financial Services Chair Spencer Bachus (R-ALA), the American Bankers Association said that the full legislative repeal of the Volcker Rule (Section 619 of the Dodd-Frank Act) is the only way to avoid the harm that it would do to the economy, bank customers, and the banking industry. In the view of the ABA, the protracted struggle of the SEC, CFTC and the Fed, despite their best efforts, to promulgate workable rules confirms the fundamental problems with the Volcker Rule. While recognizing that there are risks in proprietary trading and other financial investments, the ABA said that a more targeted, supervisory approach would better address the management of those risks, which through agency oversight could be promptly identified, addressed, and corrected.

As an immediate action step, the ABA urged the Committee to alert the agencies to the harm to credit availability and market liquidity that would be caused by adoption of the pending proposal, and direct the agencies to ensure that, when finalized, the rules do not impair traditional banking services and their availability to bank customers nor impose costs on banks, particularly regional and community banks, where no argument of systemic risk could be justified.