Chairman Bachus Statement On Section 619 of the Dodd-Frank Act or Volcker Rule's Impact On Markets, Investors And Jobs

January 18, 2012

Financial Services Committee Chairman Spencer Bachus released the following statement about today's joint Subcommittee hearing on the Volcker rule.

"Thank you, Chairman Capito and Chairman Garrett, for convening today’s hearing to examine the regulatory proposal to implement Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule.

"The proposals issued by the regulators to prohibit bank holding companies and their affiliates from engaging in 'proprietary trading' and sponsoring and investing in hedge funds and private equity funds are hundreds of pages long. They ask respondents more than 1,300 questions about more than 400 topics. In order to work, the Volcker Rule depends upon regulators being able to identify and define the differences between 'proprietary trading' and 'market making.' Yet as a matter of practice, and as the draft rules demonstrate, making such distinctions will be difficult, if not impossible.

"The Volcker Rule’s goal was to prohibit bank holding companies and their affiliates from engaging in so-called risky activities. Unfortunately, the rule’s impact on market liquidity, access to credit, the cost of capital and job creation will unnecessarily stifle the growth of businesses that operate far from Wall Street, and hamper the ability of asset managers, pension funds and insurance companies to grow their portfolios for millions of individual investors.

"The U.S. capital markets are the deepest and most liquid of any in the world. The question for this Committee is whether implementation of the Volcker Rule in its current form represents a self-inflicted wound that will undermine the competitiveness of our markets and raise borrowing costs on a broad range of U.S. businesses, thereby damaging our economy."