The bottom line: Compliance under the market-risk capital test would be less burdensome because lenders would no longer have to make subjective calls about their intentions with each trade. Whether Wall Street trading books would swell is harder to predict.
In their current re-write, officials are also seeking to ease constraints on banks’ investments in private equity and hedge funds, the people said, an area largely ignored in the 2018 proposal. The Fed, which is leading the effort, might relax restrictions on foreign lenders’ investment funds, and it could give U.S. banks more leeway to provide credit to certain funds, according to the people.
The five agencies responsible for the rule -- the Fed, the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Securities and Exchange Commission and Commodity Futures Trading Commission -- are also working to streamline the data that’s supposed to be reported to regulators under Volcker, the people said.
A new Volcker proposal to replace last year’s version -- an effort one agency head joked could be called Volcker 2.1 -- would push back a final overhaul of the trading rule. Still, several officials including Treasury Department counselor Craig Phillips, who has led that agency’s work on regulatory policies, have openly suggested a re-proposal may be necessary.
Even when proposing Volcker 2.0 in 2018, Fed Vice Chairman for Supervision Randal Quarles said regulators might not be done with the job, calling it “an important milestone in comprehensive Volcker rule reform, but not the completion of our work.”
This article was provided by Bloomberg News.