Led by Senate Banking Committee Chairman Mike Crapo (R-Idaho), seven Republican senators today endorsed efforts to revisit the Volcker Rule and urged the agencies to go beyond their proposed policy changes in making fixes to the complex rule. Specifically, the senators noted that the agencies’ July proposal suggested “few changes” to the rule’s provisions on “covered funds.”
“We encourage the agencies to use the discretion granted them by Congress in Section 609 to revise the definition of ‘covered fund’ or include additional exclusions to address the current definition’s overly broad application to venture capital, other long-term investments and loan creation,” the senators said.
The agencies’ proposal would streamline and tailor the rule by focusing its restrictions on proprietary trading and investments in covered funds on banks with “significant” and “moderate” trading activities; banks with limited trading assets and liabilities of less than $1 billion would have a rebuttable presumption of compliance with the Volcker Rule. The proposal followed a provision in the S. 2155 regulatory reform law that generally exempts banks with less than $10 billion in assets from Volcker Rule requirements to significantly reduce the rule’s burden on community banks.