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'Utterly Artifical, Wholly Political' Deadline MET

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In spite of Republican SEC Commissioner Daniel Gallagher's complaints, the Volcker rule is here.

All five regulatory agencies put to a vote and approved the Volcker rule Tuesday, ushering in a new era of tough oversight that drills to the core of Wall Street's profitable markets and trading businesses.

The rule will put in place new hurdles for banks that buy and sell securities on behalf of clients, known as market making, and will restrict compensation arrangements that encourage risky trading. The Fed also approved an extension to give banks until July 2015 to comply with the rule, though firms will be expected to make "good faith" efforts to get into compliance earlier.

Danny Boy didn't even get to grandstand publicly, since the SEC gave its assent via inter-office memo.

The five-member commission won’t vote at a public meeting to adopt the rule, said John Nester, a spokesman for the regulator. The agency instead will use a process known as seriatim that calls for commissioners to weigh in on paper.

The SEC's two Republicans, Michael Piwowar and Daniel Gallagher, voted against the rule, saying regulators moved to finalize the regulation without adequate economic analysis or the benefit of public comment on some provisions that weren't in the original 2011 proposal. In a statement, Mr. Piwowar said the agency had a "moral" and "common sense" duty to re-propose the measure before finalizing it.

Mr. Gallagher said regulators weren't given enough time to review the final version of the rule and were under intense pressure to meet an "utterly artificial, wholly political" year-end deadline to complete it.

Which is not to say that Commissioner Gallagher is always opposed to "utterly artificial, wholly political" deadlines or rushing rules through without due consideration.

Aguilar said at the time that he believed the proposal needed investor protections and that, as written, it would increase fraud. Outgoing Chairman Mary Schapiro seemed to agree, but moved forward anyway, citing the "narrow mandate that Congress placed upon us" in April's JOBS Act, which required the removal of an 80-year-old ban on general solicitation by private funds….

According to internal e-mails provided to Congress, SEC staff initially recommended an interim final rule to immediately end the ban in August. But after the Consumer Federation of America's Barbara Roper e-mailed the SEC to express "strong objections" to imposing the rule without a comment period, Schapiro backtracked….

In the wake of Schapiro's decision, Republican Commissioner Daniel Gallagher told her, "I am furious."

Regulators Vote to Back Volcker Rule [WSJ]


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