“The Office of the Comptroller of the Currency, criticized for missing some high-profile problems such as JPMorgan Chase & Co.’s London Whale losses, will institute a five-year rotation schedule for in-bank examiners, the agency said today in response to a review of its practices by non-U.S. regulators. The regulator also said transfers to the risk-analysis group would reduce the number of on-site examiners.”
AFR sent a letter to members of Congress, urging them to oppose HR 4167. If enacted, this legislation would advance the interests of a few Wall Street mega-banks in weakening implementation of the Volcker Rule ban on proprietary trading.
“We don’t believe that this is enough,” Marcus Stanley of Americans for Financial Reform told the Washington Post. “Raising $60 billion in extra capital is helpful, but it’s really not in line with the kinds of risk we saw in the financial crisis.”
“The 2010 Dodd-Frank financial reform law required the Fed to restrict its emergency lending powers so that too-big-to-fail banks don’t expect the central bank to dole out easy money again in the event of another financial crisis,” writes Erika Eichelberger of Mother Jones. Three years later, the Fed has come out with a draft rule that “misses the mark,” interpreting “the statute in ways that minimize limits on emergency lending authority.”
AFR sent a letter to members of Congress, urging them to oppose HR 4167, which would exempt almost all collateralized loan obligations issued before January 14th from Volcker rule restrictions on bank sponsorship of external funds, allowing banks to continue to hold these instruments. Because managers of CLOs can buy and sell assets this would create a major loophole in Volcker rule prohibitions on proprietary trading.
“Though small compared to Wall Street and the right, groups like Americans for Financial Reform and Better Markets show up extensively in the comments on the Volcker Rule. In the final rule, there are hundreds of references to the detailed comment letter the Occupy the SEC group sent…” The work of these outside groups “is a major piece of what makes solid final rules happen.”
“The strength of the rule is the scope of the compliance regime,’ said Marcus Stanley, policy director of Americans for Financial Reform. “The regulators correctly realized that most proprietary trading is hidden within supposedly innocent activities like hedging or market making.”
“After years of consideration, the five agencies charged with implementing the Volcker Rule have reached agreement. This is an important step forward in financial reform. The final rule reflects hard work by champions of the rule within the regulatory agencies, the Administration, Congress, and the public-interest community… [But] today’s approval is only one step toward realizing the promise of the Volcker Rule.”
Commercial banks – the traditional focus of financial regulation – no longer stand at the center of the financial system. Broker-dealers, money market funds, asset managers, and insurance companies have become key actors, with the potential to shake the stability of the whole economy. Join prominent experts, reform advocates, and regulators for a discussion of the “shadow banking” system of market-mediated credit and the steps needed to integrate it into a safer and more sustainable financial system.