Rep. Peter King (R-N.Y.) plans to introduce a bill this week that mandates a suspension of the Volcker Rule’s implementation until the U.S. Treasury can verify that international competitors are undertaking similar measures.
Under the bill, called the U.S. Financial Services Global Viability Act, suspension of the Volcker Rule will remain effective until the Treasury “identifies the foreign countries (including the United Kingdom, France, Germany, Switzerland, Japan, Brazil, China, Canada and Mexico) that have foreign banks chartered and headquartered in such countries that compete significantly with banking entities subject to the [Volcker Rule].”
Additionally, the Treasury must certify “that such countries have applied to such foreign banks, including the subsidiaries and affiliates of such banks, requirements equivalent to those set forth under” the Volcker Rule.
The Volcker rule, a provision of the 2010 Dodd-Frank Act, prohibits banks from engaging in proprietary trading — or risky investments with client funds — and reduces the ability of financial institutions to invest more than three percent in private equity and hedge funds. Critics of the provision maintain that such a rule would undermine U.S. competitiveness and damage market liquidity.
The 298 page draft of the Volcker Rule, released in October, was supposed to be finalized by July 21, but regulators failed to meet that deadline.