The Trump administration will soon begin rewriting the "Volcker Rule" that limits banks from speculating with taxpayer-backed deposits, Treasury official Craig Phillips said Monday.
The Volcker Rule, a major part of the 2010 Dodd-Frank financial reform law, is one of the top post-crisis rules that needs to be scaled back, the administration has said for
Phillips, speaking at the Trump International Hotel to a conference of the Institute of International Bankers, said that the administration is almost ready to begin rewriting the bill, a massive undertaking that will involve five agencies.
"I think there’ll be activity on that, you know, commencing shortly," said Phillips, who is counselor to Secretary Steven Mnuchin and previously an executive at the asset manager BlackRock.
Phillips said the Federal Reserve and the Office of the Comptroller of the Currency were putting together a "term sheet" of potential changes, and he's seeing "positive momentum" toward officially proposing rule changes.
The Volcker Rule, named for former Fed Chairman Paul Volcker, was justified as a protection against banks receiving a subsidy, via federally-backed insurance for bank deposits, to speculative investments.
Under the rule, banks are limited in their ability to make certain transactions using insured deposits, and are prevented from owning hedged funds.
Last year, the Treasury proposed several changes that would make it easier for banks to trade to meet clients' needs.
It also called for exempting smaller banks, those with under $10 billion in assets, from the rule. Legislation set for consideration in the Senate this week would achieve that goal.