The Trump administration is moving toward making “material changes” to a key post-crisis banking rule, the Federal Reserve’s vice chairman for supervision said Monday.
Randal Quarles, a Trump appointee responsible for coordinating regulatory policies, said the banking agencies will “proceed with dispatch” to revise the Volcker Rule, a major regulation that was a centerpiece of the 2010 Dodd-Frank financial reform law.
The complex rule, which is meant to prevent banks from speculating with deposits insured by taxpayers, is an “example of a complex regulation that is not working well,” Quarles said to laughter from the audience, a convention of the Institute of International Bankers at the Trump International Hotel.
Earlier in the day, Treasury official Craig Phillips also suggested to the audience that changes to the rule were coming quickly.
The Volcker Rule includes complex provisions to distinguish between bank transactions that are meant to serve clients, for example by managing cash flow or carry out trades for clients, and ones that are purely speculative.
Phillips said the rule has to be changed to allow banks to carry out trades for their clients with “less fasting and prayer” about whether the transaction would fall afoul of the rules.
Rewriting the rule will be a major undertaking requiring action from five federal agencies, including the Fed.
The Trump administration has been pushing for a revision for months, and agencies are already working on it, Quarles said.
While Wall Street critics back the rule as a critical check on risk-taking, the industry and members from both parties have suggested that it may be too restrictive, preventing banks from offering liquidity.
Congressional conservatives dislike the regulation. House Republicans voted last year to repeal it altogether.
