Almost a quarter of the U.S. Senate, mostly Democrats, are urging regulators to act promptly to publish a final version of the so-called Volcker rule, which restricts banks from trading for their accounts also known as proprietary trading.
The letter is expected to raise concerns from the life insurance industry.
The industry said in a comment letter that the latest version of the proposed rule has unintended consequences because it has the potential to raise premiums for customers and reduced their ability to provide options and innovative features in their products by impeding an insurance company’s ability to manage its fixed income portfolio and to enter into and manage hedging transactions.
Sens. Carl Levin,Mich., and Jeff Merkley, Oregon, got 19 fellow Democrats and one independent to sign on to the letter. They were the original sponsors of the amendment ultimately incorporated into the Dodd-Frank Act before it was passed in 2010.
“The economy needs these protections, our constituents deserve these protections, and the law demands these protections,” the letter said.
The letter was written in response to a recent announcement by the four federal regulatory agencies crafting the rule clarifying that the Dodd-Frank Act grants banks two years to fully comply with the Volcker Rule. In the letter, the regulators said proprietary trading need not be affected by the rule until July 2014.
The letter was sent to the heads of the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the Office of the Currency.
Highlighting a concern that final action on the rule will be delayed or perhaps totally rewritten, the letter urged the regulators to act promptly.
“To be sure, the proposed rule is not perfect, but it should not be delayed or scrapped,” the letter said. “Please implement a clear, strong, and effective Volcker Rule without delay.”