Wed, Jul 23, 2014
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. Events – AIMA Australian Hedge Fund Forum, Sept. 16, Sydney[more]

    AIMA Australia invite you to join us at our annual Hedge Fund Forum on Tuesday 16th September 2014 at the Sofitel Sydney Wentworth. The AIMA Australian Hedge Fund Forum is a non-profit hedge fund conference organised by the industry for the industry, featuring quality Australian and internation

  2. Opalesque Exclusive: Loeb, Grantham cite growing economic concerns in letters[more]

    Bailey McCann, Opalesque New York: Hedge fund manager Daniel Loeb, head of Third Point, and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. have both released their quarterly investor letters today. While news is positive on some fronts, and both men see pockets of opportunity, they also h

  3. Investing – Hedge funds expect Netflix earnings to catapult forward, Third Point's Loeb takes stakes in Fibra Uno, YPF, Royal DSM, Lake Capital in talks to back Engine Group[more]

    Hedge funds expect Netflix earnings to catapult forward From Investing.com: Netflix has made major strides forward in 2014 despite ongoing battles with the FCC and cable companies over the issue of net neutrality. The FCC has now received over 500,000 comments from the public on its pend

  4. Opalesque Roundtable: European family offices struggle to retain their investments in offshore hedge funds[more]

    Komfie Manalo, Opalesque Asia: The European Union’s Alternative Investment Fund Managers Directive (AIFMD) will constrain investment opportunities amidst concern a number of U.S. fund managers will stop marketing their products in the European Union under the new rule, said Valentin Bohländer fro

  5. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm