A year and a half into the new administration, it may be fair to say that President Trump’s grand promises to deregulate have amounted to more bark than bite. But just in time for an Intelligize webinar on the topic (more on that below), the deregulatory effort has grown some teeth – especially in the financial sector, where a Fed proposal yesterday may have signaled the death knell of Dodd-Frank’s Volcker Rule.
The Volcker Rule, of course, is the contentious regulation that prohibits banks from “proprietary trading” or “trading on their own account.” Those are fancy ways of saying that we don’t want banks to be making risky trades with their own money and going belly up. Such fancy terms are necessary, because in practice it’s pretty hard to tell the difference between the risky trading we don’t want and the kind of trading that banks have to engage in to make markets and effectively serve their customers. It took the Volcker rule more than 1,000 pages to do so, and a lot of people weren’t happy with it.
Yesterday, the Federal Reserve proposed simplification of the rule, which, per Reuters,“seeks to make clear which trades qualify for safe harbors, such as when banks facilitate client trades and hedge risks, and to expand those exemptions.” The rollback was blessed by an Obama-appointee to the Fed as well as former Fed Chairman Paul Volcker himself, and does not exactly authorize banks to hit the craps tables in Vegas. Still, it’s an undeniable victory, both symbolically and substantively, for advocates of deregulation.
It wasn’t their only recent win on Dodd-Frank. Little more than a week ago, Congress relieved small and medium-sized banks from regular “stress testing,” and left fewer than 10 banks in the U.S. subject to the strictest federal oversight under Dodd-Frank. And in April, the Fed and the OCC (Office of the Comptroller of the Currency) proposed to relax limits on how much the largest banks can borrow.
These moves are all timed well for Intelligize’s upcoming webinar on the suddenly hot topic of deregulation. The free webinar, called “Deregulation Under Trump . . . Or Not?,” will take place on June 6. Our own Marc Butler will lead a panel that also includes Scott Kimpel of Hunton Andrews Kurth and Anna Pinedo of Mayer Brown. They will touch on all the above, and discuss more broadly how the promise of deregulation in the Trump administration has met with reality in Congress and federal agencies, including the SEC. Their presentation will cover the status of rules most relevant to our readers, including the changed revenue recognition standards and the newly implemented pay-ratio disclosure rule. Sign-up here.