Tue, Dec 6, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Lawmakers fail to reach agreement on Volcker rule

Thursday, June 24, 2010
Opalesque Industry Update – Congressional negotiators struggled but failed to reach an agreement on Wednesday into a sweeping financial industry reform, including the so-called Volcker rule that bans depository institutions such as banks, to use their own funds to reap profits rather than acting on behalf of their clients, various media reports said.

The Volcker proposal, now known as “the Volcker rule” after its main proponent economic adviser Paul Volcker, was among the most contentious issues during the debate, according to Chicago Tribune.

But House Financial Services Chairman Barney Frank said he intends to keep negotiators at the bargaining table as long as necessary to finish work on the proposal before Friday. "No one is interested in fomenting uncertainty. We stay until we finish,” he declared.

Democratic leaders from the Senate and the House labored to convince fellow Democrat Senator Blanche Lincoln to soften a provision she forwarded that would force banks to throw away certain lucrative business, including derivatives trading.

The New York Times said a group of Democratic legislators from New York, where derivatives trading is concentrated, expressed criticism over the inclusion of Lincoln’s language, warning that it could jeopardize their support for a wider proposal to reform financial regulation.

As this developed, Democratic leaders are rushing to gain the support of several Republican senators for the passage of the bill during the two weeks of conference committee hearings which began Wednesday. According to The Hill, the Democrats are also working behind the scenes to bridge inter-party rifts caused by the proposal of Sen. Lincoln.

Exemptions
Prior to the convening of the conference committee, Reuters reported that a compromise may have been reached to tighten the Volcker rule and allow banks to maintain small investments in private equity and hedge funds under a Senate revision.

The U.S. banking industry, their lobbyists and some sympathetic congressmen, have pushed to undercut the Volcker Rule, by introducing a series of exemptions and allow banks to continue operating their hedge funds and private equity units. Reports said that the three main exemptions are excluding asset management and insurance companies, an exemption that would allow banks to continue to invest in hedge funds and private equity firms, and a long delay that would give banks up to seven years to enact the changes.

But Frank has already stated that these exemptions that the banks are pushing would face an uphill battle in Congress as there are many legislators are opposed to the proposal.

Volcker upbeat on reform bill
One of the main opponents of the proposed exemption is the author of the bill himself, Volcker. In his May 17 letter to Senate Banking Committee Chairman Christopher Dodd, Volcker said "I absolutely oppose any such modification" of the U.S. Senate's Wall Street reform bill.

In fact, early this month, Volcker expressed optimism that a “reasonable form” of a sweeping U.S. financial overhaul would be approved by legislators during the two-week conference committee hearing. He added that the proposed financial reform would become a global model and allow countries to work together that was not possible in the past.
-Precy Dumlao

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. M&A - AllianzGI to acquire Sound Harbor Partners, SS&C completes acquisition of Wells Fargo's Global Fund Services business[more]

    AllianzGI to acquire Sound Harbor Partners Allianz Global Investors (AllianzGI), an active investment manager, announced that Sound Harbor Partners, a US private credit manager led by Michael Zupon and Dean Criares, have agreed to join its fast-growing Private Debt Platform. Under the te

  2. Hunt for yield pushes more investors into riskier assets[more]

    From FT.com: Pension funds and insurance companies have increasingly embraced riskier assets in their hunt for higher returns over the past five years. Alternative assets such as property, infrastructure, private equity and hedge funds have been bought up by institutional investors in a world where

  3. People - Nectar Financial hires senior investment team, Texas A&M replaces retiring foundation investment chief, Ex-Cadwalader partner Woolery makes another sudden exit, How to become a Python coder at a top hedge fund, by the co-CTO of Man AHL[more]

    Nectar Financial hires senior investment team Nectar Financial AG, a Swiss financial technology company for wealth and asset management, has announced that it has hired two key senior leaders to spearhead its digital asset management efforts. The company also announced that it has entere

  4. Activist News - Cognizant has introductory discussion with activist investor Elliott; to review letter, Starboard Value makes huge investment in Hewlett Packard, Hedge fund calls for removal of First NBC Bank CEO[more]

    Cognizant has introductory discussion with activist investor Elliott; to review letter From Indiatimes.com: Cognizant said it had an introductory discussion with Elliott Management after receiving the activist hedge fund's letter asking for a board shakeup, a buyback, a dividend and chan

  5. Opalesque Exclusive: Ireland relaxes treatment of direct lending funds[more]

    Bailey McCann, Opalesque New York: The Irish Central Bank has relaxed its treatment of direct lending funds, according to a recently released