Today is the effective date of the Volcker Rule. Banks must have their compliance programs in place, and examiners will be reviewing banks’ compliance with the Volcker restrictions on proprietary trading and covered fund investments.
Since the rule was finalized, ABA has aggressively and successfully engaged to reduce the rule’s impact on members — especially community banks, whose operations were not intended to be targeted by Volcker. For example, in December 2013, ABA sued the regulators over a provision in the rule that would require massive and unnecessary writedowns on banks’ holdings of trust preferred securities in collateralized debt obligations, which quickly led to substantial regulatory relief.
ABA has also pressed for extensions on bank holdings of CLOs and illiquid funds, as well as bank director and employee holdings of covered funds, which led to the Federal Reserve granting two-year extensions of the effective date for legacy covered funds.