Wall Street’s campaign to chip away at the toughest trading restriction imposed on banks after the financial crisis is finally paying off under President Donald Trump, Bloomberg reports.
The Federal Reserve Board, now led by Trump appointees, will meet today to start rolling back the Volcker Rule, a regulation that was key to Washington’s efforts to make the industry safer following the 2008 meltdown.
Volcker is meant to prevent banks with federally-backed deposit insurance from suffering outsized losses by prohibiting them from making speculative market bets with their own capital. But firms contend the rule is unnecessarily complex and almost impossible to adhere to, arguments their armies of lobbyists have aggressively made since it took effect in 2014.
The Fed will be the first agency to vote on whether to seek public comment on the overhaul, followed by agencies including the Securities and Exchange Commission and the Federal Deposit Insurance Corp.
The expected revisions, known as Volcker 2.0, would likely reduce banks’ compliance costs by easing some of the demands that they dislike most, including the assumption that positions lenders hold for fewer than 60 days are proprietary.
Revising Volcker could be a particularly drawn-out process because five different agencies must sign off on any tweaks—the Fed, SEC, FDIC, Office of the Comptroller of the Currency and Commodity Futures Trading Commission. For comparison, the rule itself wasn’t approved until three years after its inclusion in the 2010 Dodd-Frank Act.
