Banks/US: Two Years To Respect the Volcker Rule

The U.S. Federal Reserve (Fed) agreed Monday to give banks which have certain complex derivatives two additional years to conform to the Volcker rule, a measure aimed at slowing down financial speculation.

Establishments that own CLOs (collaterized loan obligations) now have until July 2017 to distance themselves from these structured, asset-backed products gathering effective debts issued by companies, announced the Fed.

According to the aforementioned Volcker rule, adopted in December, banks in the U.S. will no longer be able to speculate for themselves, nor will they be allowed to use certain financial products as investing assets. Nevertheless, the banking industry was lobbying to include several exceptions and hoped to exclude CLOs from being subjected to the full force of the law.

The deadline granted by the Fed does not resolve the key issues, retorted the ABA (American Banking Association). “These products, like many others, have been created to answer clients’ needs and are not for speculation.”*

“The fact that they are covered by the Volcker rule continues to puzzle us,”* added the ABA, asking the regulators to find another “general” solution to the problems laid by this law.

Part of the Wall Street regulation law voted in 2010, the Volcker rule was finished by the American regulators after five long years. It will take effect officially in July 2015.

*Editor’s note: This quote, accurately translated, could not be verified.