Volcker rule deadline is 2014, U.S. says - Institutions worried that regulation applied come July19 April 2012, by Ronald D. Orol - Washington (MarketWatch)
http://www.marketwatch.com/story/volcker-rule-deadline-is-2014-us-says-2012-04-19Big banks will have at least until July 2014 to fully conform to the Volcker rule, the regulation that aims to restrict speculative trades with their own money, bank regulators said Thursday.
Regulators, including the Federal Reserve, provided banks with guidance in response to concerns that they would need to comply with a statutory deadline of July 21, 2012 in adopting new rules.
The central bank added that July 21, 2014 is the deadline, “unless that period is extended by the Fed.”
Jaret Seiberg, analyst at Guggenheim Securities LLC in Washington, said the latest guidance is a positive for the big banks that will be most affected, including J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc. and Bank of America Corp.
He added that this bodes well for banks because it gives regulators more time to write regulations.
“Our view is that the rule will become more moderate the longer it takes to finalize, especially if regulators delay until after the election,” Seiberg remarked.
“This statement suggests a longer delay in finalizing the rule is likely, which means the final rule should be moderate. That would be positive for the big banks.” The Fed and other financial regulators proposed new regulations in October and say that they are seeking to write the rules by this July.
(The regulation in question is named after an idea suggested by former Federal Reserve Chairman Paul Volcker.)
However, Federal Reserve Chairman Ben Bernanke said in February that it is unlikely that the Volcker rule would be approved by the July deadline set by the Dodd-Frank Act statute that created it. The guidance comes after Sen. Mark Warner, Democrat of Virginia, told MarketWatch last month that he was in discussions with other senators about sponsoring legislation that would provide clarity to big banks about their compliance date.
The Volcker rule seeks to prohibit big banks from trading stocks and derivatives with their own money.
It also limits banks’ investments in hedge funds and private-equity funds in an effort to reduce risks to the broader financial system.
Regulators in Canada, Japan and the United Kingdom also have raised concerns with the proposal, arguing that it could impair the ability of their countries to sell their bonds.
Read about EU regulator raising concerns with the Volcker rule.
Meanwhile, consumer groups and “Occupy the SEC,” an offshoot of the Occupy Wall Street movement, back the provision, arguing it would limit the likelihood of future taxpayer-funded bailouts and also protect the economy.
The move comes after intense media attention over big bets taken by one J.P. Morgan trader in London, dubbed the “London Whale.”
The Wall Street Journal reported recently that Bruno Michel Iksil, who is part of the bank’s chief investment office, has a very large position in credit-default swaps in corporate bonds and some hedge funds are betting against him.
BottumsUpline: Volcker rule will be detroyed or watered down so much that it doesn’t do anything before it has the change to see any daylight.[/size]
