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August 9, 2019

Stop Wall Street’s Biggest Banks from Gambling

Friday, August 9, 2019

Washington, D.C.  –  Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement with respect to the new Office of Financial Research (“OFR”) staff paper on the purported bond-market liquidity effects of the Volcker Rule:

“The ‘staff working paper’ released by the OFR claiming the discovery of effects from the Volcker Rule on corporate bond liquidity suffers from numerous deficiencies and is being oversold.

“First, it is not, as some have already claimed, an ‘OFR study.’  Indeed, it expressly states that ‘the views and opinions expressed are those of the authors and do not necessarily represent official positions of the OFR or U.S. Department of Treasury.’  It is merely a ’staff working paper’ that consists of ‘preliminary research findings in a format intended to generate discussion and critical comment.’  Thus, it is not the OFR’s views; it is not a study; it is not final; and it is not yet peer-reviewed or published in an authoritative journal.

“Second, the industry and its allies have searched for years to find a problem caused by the Volcker Rule and have failed repeatedly.  Virtually every study has found no evidence of widespread negative liquidity effects specifically due to the Volcker Rule.  Therefore, even if the OFR staff’s preliminary research has found some evidence of liquidity impacts from the Volcker Rule, it is an outlier that conflicts with virtually all the other findings.   

“Third, Wall Street’s too-big-to-fail banks continue to claim that the Volcker Rule has had impacts on liquidity but fail to produce or publicly disclose the evidence that they uniquely possess regarding trading, and which would uniquely benefit them by supporting their otherwise baseless claims.  The only conclusion must be that such evidence either doesn’t exist or, more likely, doesn’t support their self-serving claims.

“Fourth, it can’t be a coincidence that President Trump’s OFR claims to have conveniently found such harm at the very same time that Trump’s deregulators are reportedly preparing to dramatically weaken the Volcker Rule.  Also, this preliminary ‘staff working paper’ was released shortly after the OFR’s new Director—who worked on behalf of those in Congress seeking for years to kill the Volcker Rule, among other financial reforms—was confirmed to the position.   

“Fifth, this preliminary ‘staff working paper’ was not part of the administrative record for the proposed pending Volcker Rule modifications and, therefore, cannot be relied upon by the agencies in considering the ill-advised and unlawful changes in that rulemaking.  Moreover, no one, including in particular, regulators should accord any weight to it until the full data sets are disclosed and independent analysis can be conducted to determine if the working paper’s methodology and conclusions are robust and well supported.

“This preliminary working paper will no doubt be used and misrepresented by those supporting Wall Street’s too-big-to-fail banks’ reckless desire to increase their dangerous, bonus-boosting proprietary trading.  However, when considering policies that have the potential to affect the financial stability of the United States, policymakers should only consider unbiased, non-ideological, data-driven, final research that is independently tested in the public marketplace of ideas.  The OFR’s staff’s preliminary working paper fails those basic, but critical tests.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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