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News May 2, 2011 Issue

Hatch Calls On Geithner To Delay Implementing Volcker Rule

Itís a tough world out there, and if the Volcker Rule is implemented ahead of Ė or in the absence of Ė similar international regulation, U.S. financial institutions could take a beating.

Thatís the message Senator Orrin Hatch (R-UT), ranking member of the Senate Committee on Finance, sent to Treasury Secretary Timothy Geithner last month in a pointed letter on the subject. "I have real concerns that a lack of due diligence in the implementation of Dodd-Frank will result in unduly burdensome regulations that will undermine the competitiveness of our domestic financial industry, putting our nation at odds with our trading partners and placing further strain on an already stressed corporate tax structure," said Hatch.

Saying he supports "well-reasoned" efforts to strengthen the U.S. financial system, Hatch cautioned that a rushed implementation of the Volcker Rule "risks crippling our financial institutions by making them uncompetitive and less able to provide the vital services imperative to a robust and sustained economic recovery."

Hatch noted that many individuals have indicated that aspects of the Dodd-Frank legislation closely align with ongoing efforts of the G-20 nations. The Obama administration has indicated on several occasions that it is engaged in an ongoing process with G-20 nations to advance the goals of international regulatory reform.

Until such international regulatory reform can be fully coordinated to level the global playing field however, Hatch urged a delay in implementing any final regulations related to the Volcker Rule in the U.S. "I strongly believe that these concerns demand delay of further implementation and rulemaking of Dodd-Frank Act provisions until and unless we receive assurances that international partners agree to adopt similar regulatory reforms," he said. 

To facilitate Senate oversight of the implementation of this aspect of the Dodd-Frank Act, Hatch requested a variety of information from Geithner, including:

  • Whether formalized consultations have occurred with G-20 nations regarding implementation of provisions and principles included in the Dodd-Frank Act, including the Volcker rule;
  • Whether any provisions of the Dodd-Frank Act are unlikely to become part of the international financial regulatory framework, and reasons why;
  • Information as to whether the administration believes that failure of G-20 nations to adopt similar provisions to the Dodd-Frank Act will place U.S. financial institutions at a competitive disadvantage with their foreign competitors;
  • Details on any action the administration has undertaken in furtherance of the International Policy Coordination section of the Dodd-Frank Act; and
  • Dates which the administration believes G-20 nations will formally adopt and implement provisions akin to the Volcker rule.