Keating responds to proposed Volcker Rule

Frank KeatingThe proposed Volcker Rule will make it impossible for banks to serve their customers and compete internationally, according to one banking industry representative.

Frank Keating, the president and CEO of the American Bankers Association, issued a statement on Tuesday responding to financial regulators’ recent proposal to the Volcker Rule, which was required by the Dodd-Frank Act.

"Only in today's regulatory climate could such a simple idea become so complex, generating a rule whose preamble alone is 215 pages, with 381 footnotes to boot,” Keating said. “How can banks comply with a rule that complicated, and how can regulators effectively administer it in a way that doesn't make it harder for banks to serve their customers and further weaken the broader economy?”

The rule disrupts banks' profitable, although risky, trading system by prohibiting them from certain business practices, including trading on their own behalf.

Keating, along with others in the banking industry, have criticized the complexity of the rule. They are also concerned with the amount of hours that would have to be spent in order to comply with the rule.

"We anticipate that this rule will be continually adjusted and reformed as regulators respond to unintended consequences,” Keating said. “Unfortunately, the resulting uncertainty will have an enduring and negative impact on the banking industry and the customers we serve.  Regulators' own estimates indicate banks will have to spend nearly 6.6 million hours to implement the rule, of which more than 1.8 million hours would be required every year in perpetuity. That translates into 3,292 years, or more than 3,000 bank employees whose sole job will be complying with this rule. “

According to Keating, the compliance hours would take away banks’ abilities to provide customer service as well as their ability to generate revenue and compete internationally.

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