The fate and form of the Volcker rule is one of only two unresolved issues in the massive U.S. financial regulation overhaul, as lawmakers work to get a final bill to President Barack Obama by July 4.
“Everything is in play right now as I’m trying to pull this together,” Sen. Christopher Dodd (D-Conn.) said of the talks over the Volcker rule, which could bar banks from the alternative investments industry and from proprietary trading.
Senators and representatives are trying to iron out the differences between the reform bills passed by each house of Congress. The 42-member committee is awaiting changes to the Volcker rule expected to be proposed by Dodd.
It is possible that the ban on sponsoring and investing in hedge funds could be weakened or done away with, leaving the rule barring only proprietary trading and owning hedge and private equity funds. Sen. Scott Brown (R-Mass.) is also pushing for an exemption from the rule for custody banks.
In exchange, Dodd may propose tougher language to eliminate the wiggle room granted to regulators under the current language of the rule.
Derivatives oversight is the other outstanding issue in the conference talks.