Volcker Rule Forces Banks to Comply With Five Regimes

Different approaches to enforcement among SEC, CFTC, Fed, OCC, and FDIC may cause "a whole lot of drama."

U.S. banks that must comply with the proprietary-trading ban known as the Volcker rule are facing inconsistent future demands from the five agencies responsible for enforcing it.

Even before the final version is released next week, current and former regulators and bank lawyers predict an uneven approach on enforcement because of differences in style and jurisdiction between the three U.S. regulators that police banks and the two agencies that monitor markets. For many banks, how enforcement is handled could wind up being more important than the language in the 1,000-page text.

SEC Commissioner Daniel Gallagher, a Republican who has called for the rule to be re-written, said he foresees his agency being forced to waste resources to issue streams of minor enforcement actions.

“The banking agencies can employ their discretion,” while the SEC won’t have the same “wiggle room,” Gallagher said in an e-mail. “Our rules are rules, and when our examiners come across a rule violation, whether egregious and intentional or peripheral and accidental, they are required to record such violations.”

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