The heads of three different regulatory agencies said ideas for major revisions to a key post-crisis trading rule may need to be re-proposed based on hundreds of public comments received.
Leaders of the Securities and Exchange Commission, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and a senior Treasury official all agreed revising the Volcker rule was a top priority. Regulators have called the issue a top policy priority going into 2019, and industry stakeholders have been amping up the volume in their calls for reform. The Volcker rule is a provision in the Dodd-Frank Act that bans proprietary trading at banks and limits their relationships with hedge funds and private equity firms.
Craig Phillips, counselor to Treasury Department Secretary Steven Mnuchin, told a group of domestic and international bankers at a conference in Washington that the rule may have to be "re-submitted" due to the sheer volume of public comments and input that the regulators have received.
SEC Chairman Jay Clayton said while there is a lot of interest from his fellow regulators to revise the rule, he said he was less certain any proposal would be released soon, given how slow interagency rulemaking progresses.
"I don't want to get ahead of my colleagues, but there is interest seeing if we can move this forward," Clayton said at the same conference. "I can't promise that we'll get it done, but I'm open to thinking about it."
FDIC Chair Jelena McWilliams acknowledged concerns that compliance with the rule has been challenging for banks, which she said she understood from a firsthand perspective in her former roles as chief legal officer for Fifth Third Bancorp and as a Senate Banking Committee staffer.
"Compliance with the rule has been challenging, to say the least, with many requirements that are extremely complex and overly subjective," McWilliams said in a speech at the conference. "While we may not all agree on the ultimate destination, there seems to be broad consensus that changes and adjustments to the rule are needed."
McWilliams, who was sworn in in June 2018, said the rule should not prohibit activities that are "clearly not governed by U.S. rules" and said the entire rule should be simplified.
"While the agencies have a heavy workload, we are prioritizing getting the Volcker rule right," she said. "Or at least as close to right as we can get within the statutory framework given to us."
The FDIC chair told reporters after her speech that under routine rulemaking procedures, if submitted comments do not have a "natural outcome," then the rule must be re-proposed and the entire process starts over again.
"I wasn't there when the rule was proposed, so I'm open to [re-proposing]," she said. "Everything is on the table."