Since the middle of 2010, the Treasury Department and independent regulators have been working to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act – historic reforms that will make our financial system stronger, more transparent, and less vulnerable to excessive risk-taking.
Today, by issuing its proposed regulation to implement the Volcker Rule, the Commodity Futures Trading Commission (CFTC) took another important step forward. Named after former Federal Reserve Chairman Paul Volcker, the principle behind the rule is fairly straightforward: Banks that benefit from government protections – such as Federal Deposit Insurance Corporation (FDIC) insurance on customer deposits – should not make risky trading bets or have inappropriate involvement with hedge funds or private equity funds. This is sensible, smart reform that protects taxpayers, eliminates a source of risk to the financial system, and focuses banks on traditional financial activities.
With today’s announcement, the CFTC joins the FDIC, Federal Reserve, Office of the Comptroller of the Currency, and Securities and Exchange Commission, which issued consistent rules last fall.
The Volcker Rule is a critical component of Wall Street Reform. When fully implemented, reform will make our financial system safer, sounder, and more transparent.
We moved another step closer to that important objective today.