(Bloomberg) -- U.S. regulators are poised to scrap their proposal for revising Volcker Rule restrictions on banks’ trading in favor of a newer version as they respond to a misstep that drew fire from Wall Street lobbyists, according to people familiar with the effort.
The Federal Reserve and other financial regulators are working on changes to their Volcker 2.0 plan that will likely require the agencies to re-propose the rule, said two people who requested anonymity because the process isn’t yet public. No final decision has been made to abandon the earlier proposal, the people said.
In writing last year’s proposal, the agencies inserted a new standard for transactions that they’d consider banned as proprietary trading. That measure drew vigorous criticism from bankers, who said it would make the often-criticized rule even more burdensome than the existing version. It isn’t clear what would replace the accounting standard that drew the criticism.
Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, said no decision has yet been made on re-proposing Volcker, and Eric Kollig, a Fed spokesman declined to comment. Spokesmen for the other agencies responsible for the rule didn’t immediately respond to requests for comment.
The revision would require approval by five separate agencies -- including the Federal Deposit Insurance Corp., the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Simplifying the rule was a big priority for the group of agency chiefs installed by President Donald Trump, and they moved relatively quickly to get out the initial revision in May.
Fed Chairman Jerome Powell told lawmakers last week that he’s heard the industry’s worries about the proposed new standard and also that the current restrictions unnecessarily hamper their investments in certain funds. He said the Fed is “looking carefully” at ways to address the complaints. But Comptroller of the Currency Joseph Otting was more pointed in January, when he said, “I think we have to step back and think through that again,” and that the agencies may have “overshot.”
