H.R. 4790, Volcker Rule Regulatory Harmonization Act.

This bill amends the Bank Holding Company Act of 1956 to exempt from the Volcker Rule banks with total assets: (1) of $10 billion or less, and (2) comprised of 5% or less of trading assets and liabilities. (The Volcker Rule prohibits banking agencies from engaging in proprietary trading or entering into certain relationships with hedge funds and private-equity funds.) The bill also grants exclusive rulemaking authority under the Volcker Rule to the Federal Reserve Board. (Currently, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission also have regulatory authority under the Volcker Rule.)

Why This Bill Is Against Our Values:

H.R. 4790 is the latest attempt to weaken the Volcker Rule, a cornerstone of Wall Street reform enacted in the wake of the financial crisis that prohibits taxpayer-backed banks from risky proprietary trading and from owning hedge and private equity funds. The bill would create a dangerous loophole by providing a blanket exemption from the Volcker Rule for banks with consolidated assets of $10 billion or less and with less than 5% of those assets in trading assets. The bill would also delegate sole rulemaking authority on the Volcker Rule to the Federal Reserve, inappropriately and unnecessarily taking away the jurisdiction of the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of Currency (OCC), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC) and making it easier for the Trump Administration to weaken or repeal the rule.” (Source: Minority Views, Committee on Financial Services Report 115-621)

“HR 4790 contains several measures that would significantly weaken implementation of the Volcker Rule. First, the bill would grant sole rulemaking authority for Volcker implementation to the Federal Reserve, as opposed to the multiple agencies that currently have responsibility. Delegating sole rulemaking authority to the Federal Reserve would cut the Federal Deposit Insurance Corporation (FDIC) entirely out of the implementation of the rule. Yet a core purpose of the Volcker Rule is to prevent deposit insurance funds from being used to finance speculative trading. The FDIC is the custodian and institutional protector of the deposit insurance fund, but HR 4790 would entirely eliminate their role in writing and interpreting the rule. This would greatly weaken the interpretation of the rule and its enforcement. The FDIC does not directly oversee any of the largest trading banks or trading desks, so eliminating the FDIC’s role in rulemaking would effectively eliminate them from implementation of the Volcker Rule. Defining the Federal Reserve as the sole rulemaking agency would also have the effect of significantly speeding up and facilitating the Trump Administration’s announced agenda of weakening Volcker Rule restrictions on proprietary trading.” (Source: Americans for Financial Reform)

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