Statement of Chairman Heath P. Tarbert in Support of the Final Rule to Revise the Volcker Rule
June 25, 2020
As I have previously remarked, the Volcker Rule is “among the most well-intentioned but poorly designed regulations in the history of American finance.[1]” While today’s final rule does not fix the fundamental flaws of the Volcker Rule[2]—only congressional action can do that—it at least represents a more accurate reading of the law Congress actually passed and brings us a step closer to a reasonable implementation of the rule.[3]
Specifically, the Volcker Rule will now no longer be applied to investments Congress never intended to be included in the first place, such as credit funds, venture capital funds, customer facilitation vehicles, and family wealth management vehicles. The final rule also contains important modifications to several existing exclusions from the prohibition on activities related to private equity and hedge funds (the “covered funds” provisions)—for foreign public funds, loan securitizations, and small business investment companies. In these ways, the final rule begins to address the over-breadth of the covered funds definition and related requirements.
I am therefore pleased to support adoption of the proposed revisions to the Volcker Rule’s covered funds provisions. While only a modest step forward, these refinements will nonetheless enhance the regulatory experience and provide clarity for market participants who have struggled to comply with the Volcker Rule.
[1] See Statement of Chairman Heath P. Tarbert in Support of Revisions to the Volcker Rule (Sept. 16, 2019), https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbertstatement091619.
[2] See, e.g., Economic Growth, Regulatory Relief, and Consumer Protection Act, Public Law No: 115-174 (May 24, 2018) (amending section 13 of the Bank Holding Company Act by narrowing the definition of “banking entity” in the Volcker Rule to exclude certain community banks).
[3] See Statement of Chairman Heath P. Tarbert in Support of Further Revisions to the Volcker Rule (Jan. 30, 2020), https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbertstatement013020b.
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