Mon, Dec 22, 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. Investing - Big hedge funds win again on PetSmart, Riverbed, RBS sells real estate loans to hedge fund Cerberus, Talisman energy speculation: Which hedge funds could benefit?[more]

    Big hedge funds win again on PetSmart, Riverbed From CNBC.com: Another week, another set of wins for activist investors. On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale a

  2. Outlook - Hedge fund manager who remembers 1998 rout says prepare for pain, Bond guru Bill Gross predicts U.S. economic growth to dip to 2%[more]

    Hedge fund manager who remembers 1998 rout says prepare for pain From Bloomberg.com: Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia. He was soon working around the clock when investors began targeting the region’s

  3. Investing - Hedge funds get boost from healthcare in 2014, Paulson & Co takes stake in Salix on heels of inventory issues[more]

    Hedge funds get boost from healthcare in 2014 From Valuewalk.com: The healthcare sector started the year on a turbulent note, as stocks of many major biotechnology companies were battered. However, most of the players in this sector have bounced back. The BarclayHedge Healthcare & Biotec

  4. Opalesque Exclusive: U.S. legal receivables fund launched in August[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Investing in asset-backed receivables is a strategy that has been an integral part of the alternative investment space within the overall fixed income asset c

  5. Comment - High fees and low performance hit hedge funds[more]

    From FT.com: Disenchantment over high fees and lackluster performance may finally be turning the tide against hedge funds, fresh data suggest. Despite generally weak returns since the global financial crisis, hedge funds have enjoyed positive net inflows every year since 2010. This helped assets und