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January 29, 2015

Will Banks Use Extra Compliance Time to Kill the Volcker Rule?

“WASHINGTON — The Federal Reserve Board’s recent delay of the Volcker Rule compliance deadline is sparking concern among critics that the move sets the stage for yet another congressional battle to weaken the Dodd-Frank Act.

“The central bank announced last month that institutions — challenged by the difficulty of divesting holdings in time — will get another two years, to 2017, to unwind private equity and hedge fund investments outlawed by the Dodd-Frank provision.

“But with the industry’s yearend success beating back the law’s separate “swaps push-out” — which had previously been subject to an implementation delay — some say banks will use the extra time they have to conform as an opportunity to push legislation to kill or roll back key parts of the Volcker Rule.

“Every day a financial reform rule is not finalized and implemented is just another day for Wall Street’s biggest banks to weaken it further if not prevent it from being applied at all,” said Dennis Kelleher, chief executive of Better Markets.

“For their part, industry representatives say the purpose of the extension — which was specifically enabled by the Dodd-Frank law — is to allow a more orderly implementation of the rule and prevent market shocks, not to upend the ban.”

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Read the full American Banker article by Joe Adler here.

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