After months of delay, financial regulators presented a final version of the Volcker rule last week. The rule is a key provision in the Dodd-Frank Wall Street Reform Act that is supposed to prohibit banks from engaging in the kind of risky trading that brought down financial markets in 2008.
The final rule is a huge victory for Public Citizen’s activists.
“Public Citizen’s members and supporters have sent more than 15,000 of the approximately 18,000 total comments that regulators have received. They should be pleased that the final rule is considerably stronger than what regulators initially proposed,” said Micah Hauptman, financial policy counsel for Public Citizen’s Congress Watch division.
Public Citizen’s activists broke the record for the number of comments submitted for rule-makings related to Dodd-Frank, helping to keep regulators’ feet to the fire during the rulemaking process.
Many activists weighed in by bringing financial industry expertise to bear, while many others urged regulators to stand strong against an onslaught of banking industry lobbyists working to weaken the rule.
In addition, our staff also weighed in to great effect, with the comment submitted by Public Citizen’s financial policy advocate Bart Naylor was cited more than 140 times in footnotes of the final rule.
Bank regulators cite Public Citizen comment letter 140 times in final Volcker Rule. Here is complete rule– http://t.co/eJx8ke94UA
— Bartlett Naylor (@BartNaylor) December 11, 2013
While the rule may leave some avenues for disguising illegal trading, we believe it is a critical step toward a safer financial system. Regulators need to be strong in their enforcement of the Volcker rule to ensure that in practice it is as effective as possible. It should be s used to curb the reckless, short-sighted culture that currently grips Wall Street, but if regulators do fail to act, we believe Congress should be ready to step in.
“The strongest protection for consumers, taxpayers and the financial system will come with the passage of the complete separation of commercial and investment banking through the 21st Century Glass-Steagall Act,” Naylor said.
Now that we’ve fought to strengthen the Volcker rule, its effectiveness will depend on the gusto with which regulators choose to enforce it. The good news is that we’ve sent a clear message that this rule matters to the American people, and that Public Citizen’s 15,000 watchdogs aren’t going to let up on the pressure.