What a difference a week makes.
On January 23, Reuters reported that dialing back the Volcker Rule which limits banks’ ability to engage in speculative investments using their own balance sheet, has emerged a top priority for President Donald Trump’s nominee for U. S. Treasury secretary, Steve Mnuchin. In written responses to questions posed by members of the U. S. Senate Finance Committee, Mnuchin said he would use his role as head of the interagency Financial Stability Oversight Council to give the Volcker Rule a stricter definition of proprietary trading.
At issue is the Volcker Rule, a contentious provision in the 2010 Dodd-Frank Act that sought to prevent lenders from putting federally-insured deposits at risk through wagers on stocks, bonds and other assets.
“As Chair of FSOC I would plan to address the issue of the definition of the Volcker Rule to make sure that banks can provide the necessary liquidity for customer markets and address the issues in the Fed report,” Mnuchin wrote in the document, which also included senators’ questions and was verified by a Senate aide.
According to Reuters, Mnuchin also said that “regulators have applied proprietary trading prohibitions to too many activities” adding that “In the responses Mnuchin also made it clear he believes the rule should only apply to “a bank that benefits from federal deposit insurance.” The Federal Deposit Insurance Corporation guarantees retail deposits at about 6,000 banks, including the consumer banking arms of the country’s largest investment banks.”
This post was published at Zero Hedge on Jan 31, 2017.
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