George Madison and Michael Lewis are partners and William Shirley is counsel at Sidley Austin LLP. This post is based on a Sidley memorandum originally published on Bloomberg Law.
The federal agencies responsible for implementing the Volcker Rule—the Board of Governors of the Federal Reserve System (FRB), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)—recently proposed significant changes to the final rule that they adopted in 2013. At that time, the agencies were charged with a difficult task: implementing a provision of the Dodd-Frank Act that was hastily and broadly drafted, despite its changing fundamentally the way that large banking organizations operate by preventing them from engaging in proprietary trading or investing in hedge funds and private equity funds (called “covered funds” in the final rule). In those circumstances, the agencies produced, perhaps inevitably, a final rule that was highly complex and burdensome, and that may well have resulted in unintended consequences.
