Five years after giving his name to a rule designed to restrict trading by Wall Street banks, Paul Volcker is pushing for another change that would put at least one top regulator out of business.
The Federal Reserve would be at the helm of a reorganized regulatory system that eliminates the Office of the Comptroller of the Currency and combines other agencies in a plan released Monday by the Volcker Alliance, a group formed by the former central bank chairman in 2013.
“The aim is a simpler, clearer, more adaptive and more resilient regime that would have a mandate to deal with the financial system as it exists now,” the group said in a report outlining its call for a new Prudential Supervisory Authority to handle supervision currently done by the Fed, OCC, Federal Deposit Insurance Corp. and the market regulators.
Support from Volcker, who ran the Fed from 1979 to 1987, was crucial in winning enactment of the Dodd-Frank Act trading restrictions that bear his name. The goal of the changes now being sought by his group of former lawmakers and regulators is to address the unfinished work from Washington’s response to the 2008 credit crisis.
The proposal — likened by Volcker to the U.K. system — would put the new agency under direction of the Fed’s vice chairman for supervision. The central bank, which has been faulted over its regulatory work before and since the crisis, could keep a “backup” authority to do its own examinations and see its reach extended into “markets not entirely in the sphere of present prudential regulation.”
Concerned about a regulatory and supervisory framework that he’s called “rickety,” Volcker told reporters Monday that the system “just doesn’t make sense” in today’s world. Lawmakers missed an opportunity in Dodd-Frank, he said, and now they should make amends.