Big banks press financial agencies on Volcker rule
Big banks paid calls on federal financial agencies in the days leading up to Monday's midnight deadline for the public to submit comments on the controversial Volcker rule, a provision of the Dodd-Frank financial regulatory legislation meant to prohibit banks from using customers' money to make risky bets on the market.
Bank of America and Morgan Stanley paid visits to the Commodity Futures Trading Commission (CFTC) in recent weeks, according to reports of meetings with outside groups that federal financial agencies make available voluntarily.
Last month representatives from the law firm Davis Polk — which was hired by the Securities Industry and Financial Markets Association (SIFMA) to write letters for numerous banks, according to the New York Times — met with CFTC chairman Gary Gensler. The law firm was also among the attendees at a January meeting with Federal Reserve officials. The Chamber of Commerce also met with Gensler in January.
Securities and Exchange Commission (SEC) officials had a dozen visits since the start of the year from Bank of America, Merrill Lynch, Goldman Sachs, the Chamber of Commerce, and other interested parties.
Because the U.S. Treasury Department only releases meeting logs monthly, and even then only after a month-long lag, it will be weeks before we know whether more meetings relating to Volcker happened in recent months with Treasury Secretary Timothy Geithner or other top Treasury officials.
According to press reports this morning, financial agencies received hundreds of letters from banks, financial institutions and other groups with a stake in how the Volcker rule is interpreted, all of them containing much criticism about the proposals. Also weighing in were groups such as Americans for Financial Reform, a coalition of union and consumer groups, and Better Markets, a financial watchdog group, that urged a strong interpretation of thge rule.
Former Federal Reserve Chairman Paul Volcker weighed in with a letter defending the rule that carries his name. He also penned an opinion piece for the Financial Times yesterday, decrying the lobbying that the issue has triggered.