A leak of the proposed “Volcker rule” language, posted to a website Wednesday night, had Wall Street lawyers scrambling to interpret its meaning Thursday, and regulators fuming.
The Wall Street Journal reports the 205-page draft of a memo, dated Sept. 30, laid out critical elements of the proposed Volcker rule.
As the newspaper notes, billions of dollars are at stake for big banks, which have been working for months to shape the rule aimed at curbing risky trading activities that played a part in the financial crisis.
“The leak left regulators fuming and opened a new front in Wall Street’s battle to soften the blow of the proposed rule,” according to the Journal. “The draft gave banking industry lobbyists several days to discuss it before Tuesday, when the Federal Deposit Insurance Corp. is scheduled to consider issuing a version for public comment.
“Talk spread that the leak could prompt regulators to move more quickly to release an official version. A lobbyist for a large Wall Street bank assigned a staffer to continuously monitor the website of the Federal Reserve, which is helping draft the rule.”
The rule is named for former Fed Chairman Paul Volcker, who proposed a ban on proprietary trading by banks, which he argued encouraged financial institutions to take excessive risks. The rule would require that large financial institutions profit from fees and commissions, as opposed to trading activity from their own accounts.
A spokesman for Volcker declined comment when contacted by the newspaper, but did say he will comment on the official version when released.