Federal financial regulators are seeking comment on a proposal that would exclude certain community banks from the Volcker rule, consistent with the recently approved Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).
The Volcker Rule, which was established as part of Dodd-Frank, restricts banks from engaging in proprietary trading and from owning or sponsoring hedge funds or private equity funds.
The five federal financial regulatory agencies – the Federal Reserve Board, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Securities and Exchange Commission – are jointly proposing to exclude certain community banks from this rule. Specifically, banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5 percent or less of total consolidated assets would be exempt from the Volcker Rule.
Additionally, the proposal would permit a hedge fund or private equity fund to share the same name or a variation of the same name with an investment adviser that is not an insured depository institution. This provision is consistent with the EGRRCPA, which Congress passed in 2018.
Comments on the proposal will be accepted from the public for 30 days after publication in the Federal Register.