Financial Regulatory Forum

WASHINGTON, March 3 (Reuters) – The Obama administration reasserted its commitment to banning proprietary trading by banks with draft legislative language on Wednesday, despite signs that the U.S. Congress is unlikely to adopt such a rule.

In a scant five pages from the Treasury Department, the administration put a two-year phase-in on its “Volcker rule” to curb “prop trading” — or buying and selling of investments on financiers’ own books unrelated to customer needs.

The rule would apply to banks, with limits slapped on large, non-bank financial firms, as well. In addition, banks would be barred from sponsoring or investing in hedge funds and private equity funds, under the administration’s language.

While key details were left up to regulators, the language showed the White House is determined to push ahead with a rule it first proposed in January, as the U.S. Senate inched its way toward acting on new financial reform legislation.

Authored chiefly by White House economic adviser Paul Volcker, the rule arrived late in a reform debate that has raged for months since the severe 2008-2009 financial crisis tipped the U.S. economy into a deep recession.

By Karey Wutkowski and Rachelle Younglai

WASHINGTON, March 3 (Reuters) – U.S. banks would be banned from proprietary trading and other large financial firms would face quantitative limits on such activity, according to draft language on the so-called “Volcker rule” from the Obama administration.

The language maintains the toughest components of the proposal first floated in January, despite skepticism from lawmakers and the industry that such restrictions would do little to prevent another financial meltdown like the one that seized markets in 2008.

Banks would also be banned from investing in or sponsoring hedge funds and private equity funds, according to a draft version of the legislative language obtained by Reuters. A final version of the language is expected to be sent to lawmakers later on Wednesday.

   By Kevin Drawbaugh
   WASHINGTON, Feb 23 (Reuters) – The Obama administration said on Tuesday it is still committed to the “Volcker rule” to ban risky trading by banks, although Congress looks increasingly unlikely to adopt the rule as proposed. (more…)

By Kevin Drawbaugh

WASHINGTON, Feb 18 (Reuters) – The next round of betting is near in a high-stakes game to tighten U.S. financial regulation and Democrats are wagering heavily on a hunch — that some Republicans cannot afford politically to block reform.

The view is strongly held at the White House, where officials remain confident, despite setbacks, that reforms will be approved by Congress this year, said congressional aides.

President Barack Obama and the Democrats need a boost as they head into November’s midterm congressional elections after disappointing outcomes on healthcare and climate change,

"Just a photo op"?

 – The author is a Reuters Breakingviews columnist. The opinions expressed are his own – 

By James Pethokoukis

WASHINGTON, Feb 15 (Reuters Breakingviews) – The much-hyped Volcker Rule proposal is failing fast in the U.S. Congress. Paul Volcker probably isn’t that surprised. The former Federal Reserve chairman joked he was “just a photo op”, even after President Barack Obama’s public embrace of his proposal to limit bank proprietary trading. The problem is that legislators are no longer interested in sweeping reform.

Any reform plan has to get through the U.S. Senate Banking Committee. Now that the mood of crisis has passed, Wall Street campaign contributions and Republican intransigence are paramount there. That means the new negotiating tag-team — Democrat Chris Dodd, the chairman, and Republican freshman Bob Corker — is not going to agree on anything radical. Corker says the Volcker Rule will not be a “major topic” for discussion, and that is probably OK with much of the committee.

Watching the banks

  BRUSSELS, Feb 16 (Reuters) – Banks in the European Union won’t face a ban on proprietary trading, the bloc’s executive body said on Tuesday, but warned the sector to check its ethics.

Securitised products and derivatives, two areas where banks have raked in revenues over the years, will also come under closer EU scrutiny, officials said.

U.S. President Barack Obama has proposed banning some banks from trading on their own account and limiting their size by forcing divestments of any hedge fund and private equity operation to make them less likely to need public bailouts.

BRUSSELS, Feb 15 (Reuters) – If U.S. President Barack Obama’s plan to ban proprietary trading at some banks was applied in the European Union, it could be problematic for the bloc’s universal banks, an EU document obtained by Reuters said.

EU finance ministers, following a call from the Netherlands which backs the proposal, will discuss its possible impact on Europe at a meeting on Tuesday but no consensus is expected.

The plan, dubbed the “Volcker rule,” was drafted by White House adviser and former Federal Reserve Chairman Paul Volcker, stunned global markets last month and is already facing resistance in Congress.

By Jonathan Spicer

NEW YORK, Feb 9 (Reuters) – The heads of the top U.S. stock exchanges have poured cold water on the Obama administration’s plan to bar banks from proprietary trading.

The chief executive of NYSE Euronext said on Tuesday the president’s plan falls short of targeting what caused the financial crisis, while his counterpart at Nasdaq OMX group Inc, the day before, said the plan would probably have to be changed.

Obama last month surprised Wall Street with the ambitious proposal to limit risky trading by banks. Dubbed the ‘Volcker rule’ after Paul Volcker, the White House economics adviser, it would bar banks from proprietary trading, or placing bets on markets with their own money.

By Kevin Drawbaugh

WASHINGTON, Feb 4 (Reuters) – The U.S. Senate on Thursday looked increasingly likely to adopt, at best, only a watered-down version of the Obama administration’s ambitious proposal to limit risky trading by banks.

After two hearings in three days on the issue, Senate Banking Committee Chairman Christopher Dodd told reporters it will be difficult to legislate a curb on bank trading practices as specific as the White House proposed last month.

He said it would be easier to include something less ambitious in a sweeping package of financial regulation reforms, under development for more than a year now, which aides said was fast nearing completion.

By Kevin Drawbaugh and Rachelle Younglai

WASHINGTON, Feb 2 (Reuters) – White House economic adviser Paul Volcker urged Congress on Tuesday to rein in risky investing by big banks to prevent them from becoming “too big to fail.”

The former Federal Reserve chairman — a sage of monetary policy and crusader for tighter regulation whose star is rising in the Obama administration,– faced questions from lawmakers about President Barack Obama’s latest proposals affecting big banks.

Obama stunned financial markets in late January by calling for new limits on banks’ ability to do proprietary trading, or buying and selling of investments for their own accounts unrelated to customers.