Regulators Vote to Back Volcker Rule All Five Regulators Approve Long-Delayed Rule for Banks Link
WASHINGTON—All five regulatory agencies put to a vote and approved the Volcker rule Tuesday, ushering in a new era of tough oversight that drills to the core of Wall Street's profitable markets and trading businesses.
The rule will put in place new hurdles for banks that buy and sell securities on behalf of clients, known as market making, and will restrict compensation arrangements that encourage risky trading. The Fed also approved an extension to give banks until July 2015 to comply with the rule, though firms will be expected to make "good faith" efforts to get into compliance earlier.
Votes by the FDIC and Federal Reserve Board unanimously approved the measure, while the SEC approved it by a vote of 3-2. The CFTC voted 3-1 to approve it, and OCC Comptroller Thomas Curry, the organization's sole voting member, was the final regulator to sign off.
SEC Chairman Mary Jo White, an independent, said the rule "faithfully and strongly" implements a centerpiece of the 2010 Dodd-Frank financial law.
She said regulators would now move to monitor the implementation of the rule and would offer "clarification" of its sprawling provisions where needed.
"Our work, thus, does not end with today's rule," Ms. White said in a statement. "We begin a new phase of monitoring and responsive engagement to ensure that the Volcker rule is a strong, workable framework that achieves the objectives set for us."
The SEC's two Republicans, Michael Piwowar and Daniel Gallagher, voted against the rule, saying regulators moved to finalize the regulation without adequate economic analysis or the benefit of public comment on some provisions that weren't in the original 2011 proposal. In a statement, Mr. Piwowar said the agency had a "moral" and "common sense" duty to re-propose the measure before finalizing it.
Mr. Gallagher said regulators weren't given enough time to review the final version of the rule and were under intense pressure to meet an "utterly artificial, wholly political" year-end deadline to complete it.
Treasury Secretary Jacob Lew said regulatory approval of the Volcker rule will help change behavior on Wall Street and protect taxpayers against the risk of another financial crisis.
Mr. Lew said the Volcker rule is a "critical step" in completing implementation of the 2010 Dodd-Frank financial law. He said regulators must remain "vigilant" against market behavior that threatens the financial system.
President Barack Obama praised regulators for finalizing the rule, saying it will make the financial system safer and increase accountability.
"The Volcker rule will make it illegal for firms to use government-insured money to make speculative bets that threaten the entire financial system, and demand a new era of accountability from CEOs who must sign off on their firm's practices," Mr. Obama said in a statement.
The Fed will now move to apply the rule to the large bank holding companies it oversees, but not "community banks" with less than $10 billion in assets, which will be exempt from the rule if they don't engage in most of the activities covered by it.
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