Fully repealing the Volcker Rule is the only way to avoid the harm it would do to the economy, bank customers and the banking industry, ABA said Friday in a letter to House Financial Services Committee Chairman Spencer Bachus (R-Ala.). But in the absence of a full repeal, the association suggested legislative approaches that would reduce—but not eliminate—that harm.
The association was responding to Bachus’ request for public opinions on less-burdensome legislative alternatives to the Volcker rule.
"[W]e would urge that the committee [immediately] alert the agencies to the harm to credit availability and market liquidity that would be caused by adoption of the pending [Volcker] proposal …,” ABA said. The panel also should direct the agencies to ensure that the rules—when finalized—do not impair traditional banking services and customer availability, nor impose costs on banks where no systemic-risk argument could be justified.
The association suggested legislative approaches that, among other things, would sharpen the Volcker Rule’s focus on what constitutes prohibited activities; provide plain and concise definitions of key terms; expressly require a cost-benefit analysis before rulemaking; and appoint the Federal Reserve as the lead agency for Volcker-Rule interpretation.
Read the letter.