Tell federal regulators: Pass the Volcker Rule
We all know that the Wall Street banks shouldn't be allowed to continue with the high-stakes gambling that crashed our economy in 2008. But the politicians in Washington, DC have by-and-large failed to act. Now regulators are poised to make a small but important step towards reform before the end of the year.
Next week, the key regulatory agencies charged with watching over Wall Street will decide the fate of the so-called "Volcker Rule." Named after former Federal Reserve Chairman Paul Volcker, the "Volcker Rule" would ban big banks from making risky bets for their own gain.
Wall Street has been trying to kill this rule since before it became law. They sought to undermine it as agencies wrote the actual regulations. Now they are engaged in a last-ditch effort to block the rule or poke it full of loopholes as regulatory agencies finalize the rule through an end of year vote. The final vote on the draft Volcker Rule is scheduled for December 10th.
Tell federal regulators: Pass the Volcker Rule, and make sure any "finishing touches" close loopholes, not create new ones.
Next Tuesday, the Commodity Futures Trading Commission, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency will all vote on a tentative draft of the Volcker Rule.1
Banks should be focused on lending, savings, and legitimate banking services. But in recent years, Wall Street giants have gone way beyond normal – and made billions by placing huge bets to pad their own pockets. What's worse, they expect the tax payers to bail them out if their bets go horribly wrong. And that's exactly what our federal government has done while exacting little in return.
This risky behavior should not be the role of too-big-to-fail banks whose demise could imperil our entire economy and force more bailouts. Yet today, 18% of bank profits come from these risky practices.2
That's why former Federal Reserve Chairman Paul Volcker proposed banning banks from engaging in these bets, also known as "proprietary trading," and why the ban was included in 2010 Wall Street reform legislation known as Dodd-Frank. Now, the titans of Wall Street are trying to turn the rule into regulatory swiss cheese, full of loopholes that allow them to continue gambling under the guise of "market-making" – or kill it altogether.
Don't let big banks kill the Volcker rule – sign the petition to federal regulators now.
Let's not forget: Wall Street lobbyists already managed to water-down the Volcker Rule considerably in Congress. Tea Partiers and Wall Street's favorite Republicans, like former Massachusetts Senator Scott Brown, claimed that any attempt to rein in Wall Street would hurt our economy.
Instead of a simple ban on proprietary trading with CEO's held accountable, we ended up with dozens of exemptions and hundreds of complicated questions for regulators to answer. Paul Volcker himself even said of the final bill, "I don't like it." Still, Wall Street kept pushing to weaken the rule, flooding regulators with letters arguing against it.3
CREDO members fought for strong Wall Street reform legislation and spoke out loudly for a strict Volcker Rule. But even though this rule isn't nearly as strong as it should be, it's an important first step towards reining in the banks. You can tell this draft rule is worth supporting because of how determined Wall Street is to stop it.
Regulators are reportedly putting the finishing touches on the draft proposal now before a vote on Tuesday. We need to make sure any last changes strengthen the rule, not weaken it, and there isn't much time to act.
We won't stop pushing for stricter rules on out-of-control banks. But we need to make sure the Volcker Rule is implemented without letting Wall Street water it down even further.
- Ben Protess, "Volcker Rule on Bank Risk Approaches Its Final Edits," DealBook, December 3, 2012.
- Michael J. Moore and Dakin Campbell, "Wall Street Sweats Out Volcker Rule Impact on Revenue," Bloomberg Businessweek, December 4, 2013.
- Pat Garofalo, "Volcker On The Watered-Down Volcker Rule: ‘I Don’t Like It’," ThinkProgress, october 24, 2011.