Tuesday, January 3, 2017

Fed Finds Serious Liquidity Flaw in the Volcker Rule

Author: David Schwartz J.D. CPA

Industry experts and regulators have debated for some time now about the effects regulation may or may not be having on liquidity. Critics of tough new bank regulations claim that the increased regulatory requirements, such as the higher capital requirements and new liquidity standards have reduced liquidity and banks' market-making capacity. Regulators, on the other hand, have been skeptical and have called for evidence showing regulations negatively affecting liquidity. In a study published on December 22, 2106, the Fed itself has produced just such evidence.

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Thursday, July 23, 2015

Who Will Enforce the Volcker Rule, and How?

Author: David Schwartz J.D. CPA

On July 21, 2015, following a long five-year proposal and comment period, the collection of restrictions imposed by Section 619 of the Dodd-Frank Act and the regulations thereunder (commonly referred to as the “Volcker Rule”) finally went into effect.  The aim of the rule is to stop US banks and their global affiliates from engaging in unecessarily risky speculation and head off myriad conflicts of interest arising from proprietary trading and from investment relationships with hedge funds and private equity funds. While this may sound simple enough, even after the lengthy consideration of the rule, it is almost entirely unclear how the Volcker Rule will be enforced and by whom. Adding to the uncertaintly, because the final text of the Volcker Rule leaves so many interpretive questions remaining, it is almost impossible for banks to know if they are completely in compliance with the rule.

 

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Tuesday, August 12, 2014

Dodd-Frank Implementation: Are We At the End of the Beginning, or the Beginning of the End?

Author: David Schwartz J.D. CPA
With the Dodd-Frank Wall Street Reform and Consumer Protection Act having just celebrated its fourth birthday, where exactly are we in the the reform of our seemingly ever-evolving regulatory framework? Dan Ryan, Chairman of the Financial Services Regulatory Practice at PricewaterhouseCoopers LLP takes a look at this very question to help us determine what is imminent, what is delayed, and what remains in limbo with regard to Dodd-Frank implementation.
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Tuesday, October 9, 2012

Full Speed Ahead on the Volcker Rules Says Senior Treasury Official

Author: David Schwartz J.D. CPA
[W]e will not back away from our fundamental responsibility of making sure our financial system is safe. But we need smart regulation that can make future financial shocks less likely and less damaging – and without unnecessary compliance costs.  We want to make sure the rules are calibrated so they allow investors to take appropriate risks and do not restrict businesses from obtaining the credit they need to hire, invest and grow.


Despite efforts to delay or prevent them, the Volker Rules are on their way says Treasury Under Secretary for Domestic Finance Mary Miller in remarks to the American Banker Regulatory Symposium.  Miller says the five regulators working on the rules have read carefully the 18,000 comment letters on their initial proposal, and expect to issue final Volker Rules perhaps by year end.

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Saturday, September 22, 2012

Should Other Countries Take the Volcker Rule Plunge First?

Author: David Schwartz J.D. CPA

Rep. Peter King (R-NY), a member of the House Financial Services Committee, will soon introduce a bill to suspend enforcement of the Volker Rule until the Treasury Department can certify that other countries have adopted and are abiding by similar statutory restrictions on on proprietary trading and sponsoring hedge funds by financial institutions.  The U.S. Financial Services Global Viability Act specifically targets  the United Kingdom, France, Germany, Switzerland, Japan, Brazil, China, Canada, and Mexico as jurisdictions of concern.  The bill would require not just certification by the Treasury Department, but an opportunity for hearings and comments by interested parties. Under the legislation, these certifications could be challenged further in the United States Court of Appeals for the District of Columbia.  The proposed U.S. Financial Services Global Viability Act represents the latest effort by law makers and others to delay or repeal the Volker Rule amid concerns that the Volker restrictions would undermine U.S. competitiveness and damage market liquidity.

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