Banks fume over 'Volcker rule'
Federal regulators unveiled new details Tuesday on restrictions that would bar banks from trading for their own profit — another blow to an industry already suffering from growing and widespread public discontent.
Banks fear that the new Obama administration regulations could negatively affect their bottom line. One analyst told The Wall Street Journal that, “at a minimum,” the new rules would cost the banks $2 billion annually.
Continue Reading“Only in today’s regulatory climate could such a simple idea become so complex, generating a rule whose preamble alone is 215 pages, with 381 footnotes to boot,” American Bankers Association Chief Executive Frank Keating said in a statement, according to Reuters.
“How can banks comply with a rule that complicated, and how can regulators effectively administer it in a way that doesn’t make it harder for banks to serve their customers and further weaken the broader economy?” he asked.
The new rules come as anti-bank sentiment reaches a fever pitch.
As protesters decry bank practices at Occupy protests across the country, banks also face a public backlash from customers unhappy about proposed or potential new banking fees. Even President Barack Obama has taken to criticizing banks as he attempts to ride a populist tone into a 2012 reelection bid.
Under the new regulations, dubbed the Volcker Rule, banks will no longer be able to make trades for their own profit. Banks previously have been able to make bets on stocks and commodities, often using money borrowed from their own customers.
Former Federal Reserve Chairman Paul Volcker, for whom the rule is named, argued that this practice increased bank profits at the cost of increased risk.
Consumer groups were just as unhappy as banks were with the proposed rule.
“Unfortunately, the proposal issued today falls well short of what the Volcker Rule could and should achieve,” American for Financial Reform said, according to Reuters.
The ban on so-called proprietary trading was outlined under the 2010 Dodd-Frank financial overhaul law, but the details are being worked out.
The Federal Deposit Insurance Corp. and the Federal Reserve have approved a draft of the Volcker Rule. Now, the Securities and Exchange Commission and a Treasury Department agency must approve it, after which the public will have until Jan. 13, 2012 to comment.
Read more: http://www.politico.com/news/stories/1011/65658.html#ixzz1afGs8zkt
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