| WASHINGTON, March 4
WASHINGTON, March 4 A fragmented regulatory
landscape and obstruction by lobbyists are to blame for a lack
of progress in banning banks from betting with their own money,
Paul Volcker said on Monday.
Volcker, a former chairman of the U.S. Federal Reserve,
defended the rule that is named after him, which became law in
2010 as part of the Dodd-Frank overhaul of Wall Street to
protect taxpayers from heavy bank bailouts.
But five different U.S. regulators are still hammering out
final details after receiving a barrage of comments from the
industry on the rule, which limits banks' exposure to risky
investments such as hedge funds and private equity.
"This has been going on for weeks and months. How many times
people told me six months ago, 'It'll be two weeks, Paul, we're
going to put the regulation out,'" Volcker said during a
discussion session at a conference.
The rule will allow firms to place up to 3 percent of their
capital into private equity funds and also bans trading they are
doing with their own capital with the sole purpose of making a
profit for the bank, or proprietary trading.
Volcker, who is now 85, blamed most of the slowdown on the
fact that so many regulatory agencies were working on the rule
together, while hundreds of questions sent in by pro-bank
lobbyists had also caused delays.
The Securities and Exchange Commission, the Commodity
Futures Trading Commission, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and the
Federal Reserve are all coordinating to finalize the rule.
Reorganizing these agencies was a missed chance when the
Dodd-Frank rule was introduced in 2010, Volcker said, though he
did not say which agencies he thought should be joined.
Recent talk has hinted at slow progress on the rule, one of
the most contested pieces of the legislation that would end some
of banks' most lucrative activities, even though many have
already stopped in anticipation of the law.
It is unclear when the final Volcker rule, which had been
scheduled for July 2012, will be unveiled. It may not be fully
implemented for years to come.
Other banks are trying to work around the forthcoming rule.
Three sources familiar with the matter said Goldman Sachs
Group Inc is attempting to keep investing in the
profitable, albeit risky, business of buying and selling
companies.. Goldman Sachs said it would comply
with all elements of the Volcker rule once it was finalised.
In a lighter moment, Volcker pointed out shortcomings in how
the proposed rule had been drafted.
"How many times have I heard when that preliminary rule came
out, 'It's 300 pages long!' Well, I must say I couldn't read it
then, it was so dense," he said. He also said the law's preamble
was "not a masterpiece of clarity."
But he defended the aim of the rule, and brushed aside
suggestions often made by investment bankers that proprietary
trading is hard to distinguish from so-called market making, in
which banks take positions to help clients trade.
"It's not a question of having to ex ante look at every
possible trade and decide whether it's proprietary or not. The
question is whether there's a pattern of proprietary trading and
I'm perfectly confident that is ascertainable and doable."
He said every bank had sufficient statistics about its
trading to decide the nature of each trade.
"You give me those statistics, I'll tell you what it is,"