Senators Mike Crapo (R-ID), Mark Warner (D-VA), Pat Toomey (R-PA), Kay Hagan (D-NC), Tom Carper (D-DE) and Bob Corker (R-TN) today introduced bipartisan legislation that provides for the implementation of the Volcker rule after the agencies have issued their final rules, rather than two years after the date Dodd-Frank was signed into law. By linking the effective date to the regulators completing their work, Congress will not be arbitrarily extending the implementation of Dodd-Frank, and financial institutions and markets will be able to comply with final rules rather than being forced to guess what those regulations might be. This is accomplished by a two-word amendment which would change the effective date from "earlier of" to "later of" between these two dates.
Federal Reserve Chairman Ben Bernanke recently testified before the Senate Banking Committee and the House Financial Services Committee that the inter-agency final rule will likely not be ready by the July effective date. Because of the limited time remaining, it is unclear how the regulators will incorporate the numerous issues raised in over 17,000 comment letters to minimize unintended consequences. In addition, many commenters have raised the discrepancy between the two-year conformance period in the statute and the pending proposed rule, which states that the agencies expect full compliance "as soon as practicable" after the effective date (July 21, 2012).
"This bipartisan, targeted legislative fix will remove the artificial compliance deadline of July 21, 2012 and allow the regulators to assess the effect of the proposed rule on the liquidity of the financial markets and the cost of capital," Crapo said. "Reviewing public comments should be more than a check-the-box exercise and the 17,000 plus comments deserve to be carefully considered and addressed in the final rule."
"I support the goals of the Volcker rule, but these are complex issues and the regulators need to get them right and finalize a rule before we ask companies to comply," Warner said. "This modest change would allow time to get the regulations right and make sure stakeholders understand them instead of being forced to guess what the final rules might look like."
"As drafted, the Volker rule proposal would have a disastrous impact on our financial services industry and our economy as a whole," Toomey said. "This bipartisan legislation will help provide certainty and greater stability in our financial services industry."
"The Volcker rule as crafted puts private businesses at a disadvantage in raising capital, and this bill is proof that there is consensus among both parties that something needs to be done to fix it," Corker said. "While the Volcker rule needs an overhaul to address the core weaknesses in the financial system without hurting the economy in the process, this bill at least gives more time to make those necessary changes."