A new regulation intended to curb high-risk Wall Street trading might be implemented sooner than many banks had hoped. The Volcker Rule, named for the former chairman of the Federal Reserve, would ban banks from engaging in proprietary trading. Despite lobbyists’ efforts to delay the rule, sources with knowledge of the matter said that officials expect to complete it by September, or as early as this summer.
When regulators proposed a first draft of the rule last year, they were heavily criticized by industry groups, which complained about the length and complexity of the proposal, with some calling for regulator to tear up the draft and start over. The was seen by some as a ploy to delay the rule-writing process until after the 2012 election, which might result in Republicans regaining control of the Senate and the White House.
Despite the opposition, regulators have no plans to throw out the current draft and start over. In fact, they are moving forward on the wording of critical provisions, like exemptions that allow banks to hold a certain amount of securities for customers.
Much of the progress in drafting the rule has been made at weekly meetings at the Treasury Department, the sources said. Coordinated by Mary J. Miller, the Treasury under secretary for domestic finance, the meetings have included senior lawyers from the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the Office of the Comptroller of the Currency.
