Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


10:36 AM
Ivy Schmerken
Ivy Schmerken
Connect Directly

Paul Volcker Sounds Off on Regulators and the Volcker Rule

The former Federal Reserve Chairman said that six regulatory bodies in the U.S. was too many, which he blamed for the stalemate in implementing Dodd Frank.

Paul Volcker, former chairman of the Federal Reserve under Presidents Carter and Reagan, said the United States has too many financial regulatory bodies, with overlapping functions. Basically, he called it a mess.

Accepting an award for leadership and excellence at a luncheon on Wednesday held by the Economic Club of New York, Volcker was critical of the number of financial regulatory bodies, leading to “neglect and stalemate.”

“It’s clear to me that this regulatory landscape is little changed. We are left with half a dozen regulatory institutions.” Volcker said six regulators were too many and that the right number was at least two and maybe three. He included the Fed and the Federal Deposit Insurance Corp., as necessary.

The number of regulatory bodies policing Wall Street since has grown since the financial crisis of 2008. When planning the Dodd-Frank Wall Street Reform Act, Congress had the opportunity to consolidate regulatory bodies, but it kept the Securities and Exchange Commission and Commodity Future Trading Commission as separate entities. In the wake of concerns about systemic risk and the mortgage fraud, it added the Financial Stability Oversight Council and the Consumer Financial Protection Bureau. Other bodies include the U.S. Comptroller of the Currency and the Federal Deposit Insurance Corp. (FDIC).

Volcker, who has been critical of Wall Street firms during the financial crisis, could the Volcker Rule that would ban proprietary trading by banks that take consumer deposits.

However, the rule has been mired in complexity as banks hired lobbyists to influence the rule writers. “I don’t think it’s complicated. In all these kinds of regulations we are suffering from American disease to have every regulation pinned down exactly,“ said Volcker. He also said that there are people who don’t like it and try to stall it.

From the Wall Street Journal’s Money Beat blog:

The so-called Volcker Rule has been stalled as banks push back against stricter language. The delays are being exacerbated as multiple overlapping financial regulatory agencies all try to figure out their role in the new regulatory environment. “The simple fact is the United States doesn’t need six financial regulatory agencies,” Volcker said in his speech. “It is a recipe for indecision, neglect and stalemate, adding up to ineffectiveness. The time has come for change.”

According to the New York Times, the financial language for the execution of the Volcker Rule may be completed this year, but experts fear it could slip into 2014.

On Wednesday, Volcker announced the formation of Volcker Alliance, a foundation to improve the way that government works. Interestingly, the Volcker Alliance will look to promote training to bank supervisors who will be charged with enforcing the Volcker Rule.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
More Commentary
A Wild Ride Comes to an End
Covering the financial services technology space for the past 15 years has been a thrilling ride with many ups as downs.
The End of an Era: Farewell to an Icon
After more than two decades of writing for Wall Street & Technology, I am leaving the media brand. It's time to reflect on our mutual history and the road ahead.
Beyond Bitcoin: Why Counterparty Has Won Support From Overstock's Chairman
The combined excitement over the currency and the Blockchain has kept the market capitalization above $4 billion for more than a year. This has attracted both imitators and innovators.
Asset Managers Set Sights on Defragmenting Back-Office Data
Defragmenting back-office data and technology will be a top focus for asset managers in 2015.
4 Mobile Security Predictions for 2015
As we look ahead, mobility is the perfect breeding ground for attacks in 2015.
Register for Wall Street & Technology Newsletters
Stressed Out by Compliance, Reputational Damage & Fines?
Stressed Out by Compliance, Reputational Damage & Fines?
Financial services executives are living in a "regulatory pressure cooker." Here's how executives are preparing for the new compliance requirements.