In a comment letter filed with the OCC, the Clearing House (TCH) made recommendations regarding how to more effectively implement the Volcker Rule to better promote lending, banking services, and vibrant capital markets while still ensuring it meets its objective of reducing risk and enhancing bank safety and soundness by restricting excessive risk-taking activities by banks and their affiliates. TCH’s letter focuses on how the existing regulatory framework implementing the Volcker Rule has unnecessarily restricted the ability of banks to conduct certain core commercial banking businesses clearly outside the intended scope of the Volcker Rule.
As the letter highlights, a fundamental problem with the existing Volcker Rule is that a broad array of banking and risk-management activities that fall within the parameters of two key definitions included the rule -- “trading account” and “covered fund.” As a consequence of the sweeping nature of these definitions, a wide range of banking, trading and funds-related activities -- not only speculative or excessive risk-taking activities that the statute was intended to target – are either prohibited or presumed to be prohibited unless proven otherwise.
The comment letter includes an Annex describing several examples of the types of risk-management and core commercial banking activities either restricted or burdened by the Volcker Rule regulations. These include activities such as managing a wide range of risks, lending and providing capital to businesses, providing custodial services to institutions, and asset management.