Regulators lobbied by industry testify on Volcker rule
Federal regulators have had at least 89 meetings with outside groups, most of them big banking interests, about the controversial "Volcker rule," the provision in the Dodd-Frank financial law that prohibits banks from making bets with their own money. The effort to curb the practice, widely held to be a contributor to the 2008 financial meltdown, was the subject of a hearing in Congress today.
Representatives of the same agencies that met with these outside interests testified that the Volcker rule would be difficult to implement. "One of the more difficult tasks in implementing the statutory prohibitions is distinguishing between prohibited proprietary trading activities and permissible market-making activities," said Daniel K. Tarullo, a Federal Reserve governor, said in prepared testimony.
Federal Reserve staffers have met with outside parties at least 35 times on the Volcker Rule, according to the Sunight Foundation's Dodd-Frank meeting tracker. In January alone, there were three such meetings, with representatives from Bank of America, Goldman Sachs & Co., JPMorgan & Co., Bank of New York Mellon, Northern Trust, State Street, and major law firms.
The U.S. Treasury Department has hosted 36 meetings. According to the most recent information available, for November, there were meetings that month on the Volcker rule with representatives from Bank of America, Citigroup, Goldman Sachs, J.P. Morgan & Co., and Morgan Stanley, among others.
Other agencies that reported meetings on Dodd-Frank were the Commodity Futures Trading Commission (CFTC) and the Federal Deposit Insurance Corporation (FDIC).
While most of these meetings were with industry groups critical of the rule, agency officials also had some meetings with groups that are supportive, such as Americans for Financial Reform, a coalition of consumer and union groups that also testified at today's hearing.
In November, Federal Reserve, the Office of the Comptroller of the Currency (OCC), the FDIC, and the Securities and Exchange Commission (SEC) jointly proposed rules to implement the Volcker rule; the comment period was recently extended until February 13. The CFTC recently issued a separate, but similar, proposal for comment.
Financial agencies voluntarily report meetings with outside groups concerning Dodd-Frank implementation. The Sunlight Foundation's Dodd-Frank meeting logs gather all of these disclosures, which appear on different websites and in different formats, into one location.