Banks Get Traction on Volcker Rule

Legislators, regulators signal willingness to revise plan after four-month lobbying blitz.

The fight over the Volcker rule is shifting in Wall Street’s favor.

After a four-month lobbying blitz led by firms including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Credit Suisse Group AG, U.S. regulators and lawmakers are signaling they’re receptive to delaying and revising their plan to stop banks from making speculative trades on their own accounts.

Bernanke Delay

While it will be months before the results of the onslaught can be fully measured, the financial industry has seen encouraging signs. That success demonstrates that four years after Wall Street helped cause the worst economic downturn since the Great Depression and prompted a $700 billion taxpayer bailout, its lobby is regaining its power to blunt or deflect efforts to rein in the banks.

Desks Eliminated

Financial interests didn’t expect to outright kill the rule as long as Democrats control the Senate and the White House. Most major firms, preparing for the ban, have already shut down the desks they used to trade for their own accounts.

‘Weaken’ the System

When BlackRock sent comments to the federal agencies last month, it delivered just the kind of warning the banks hoped for. The rule as written “will limit U.S. banks’ competitiveness and ultimately weaken the very system it was designed to protect,” BlackRock wrote in its Feb. 13 letter.

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