FOR IMMEDIATE RELEASE
December 18, 2014
Contact: Marcus Stanley
AFR STATEMENT ON FEDERAL RESERVE DELAY OF VOLCKER RULE IMPLEMENTATION
Today, the Federal Reserve announced that it would delay the effective implementation of a crucial part of the Volcker Rule for up to two additional years, through July 2017. The delay affects the ‘covered funds’ provision of the Volcker Rule, which prohibits bank ownership of and investment in external funds such as hedge funds, private equity funds, and securitization vehicles.
The delay in implementation of the ‘covered funds’ provision is deeply disappointing and raises serious questions about regulators’ intentions to properly enforce theVolcker Rule. Since proprietary trading can occur through the mechanism of external funds, the delay in divestment requirements for covered funds will greatly weaken the enforcement of other crucial parts of the Volcker Rule as well.
This latest delay in Volcker Rule implementation comes in addition to multiple previous implementation delays by regulators, including a previous one-year delay in the implementation of the covered funds provisions and a two year delay in divestment of CLOs (collateralized loan obligations) that do not conform to Volcker Rule ownership restrictions. These blanket delays are also in addition to generous transition periods provided by the law itself, and statutory provisions for extended transition periods in special cases where specific issues with conformance can actually be documented.
It has now been four years since the passage of the Volcker Rule. The public needs and expects to see concrete progress in the implementation of the rule, not continual delays.