FRB Charts Careful Path to Target Volcker Relief to Small, Foreign Banks
Following more forward signaling than we can remember for most consequential rulemakings, the FRB today unanimously began the five-agency process of revising Dodd-Frank’s Volcker rule (see FSM Report PROPTRADE6). As anticipated, the proposal does not implement new statutory small-bank relief (see Client Report SIFI25), but addresses some of the most problematic aspects of the rule for banking organizations with small trading books, defined as those with less than $1 billion in trading assets and liabilities. These companies would come under a rebuttable compliance presumption. “Moderate” and “significant” trading organizations – about forty firms or 98 percent of industry trading – would come under tailored standards scaled up to apply most stringently to the largest companies.