Here's The One Word That Could Change Everything In The Volcker Rule

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Lobbyists for financial firms hope to change one critical word in the Volcker Rule included in Dodd’s financial reform bill.The current language says federal agencies “shall issue final regulations implementing” the Volcker rule.

According to Bloomberg, the lobbyists’ proposal suggests changing “shall” to “may issue final regulations implementing” the Volcker rule.

As it stands, Dodd’s bill already includes a weaker version of the Volcker Rule. The original rule would ban banks from proprietary trading or investing in hedge funds and private equity funds.

Dodd’s Volcker rule would ban banks from prop trading at some point in the future.

Now Dodd’s committee is gathering to weigh watering the Volcker rule down even more. They will consider a number of amendments, one of which is whether or not to change the word “shall” [implement in the future] to the word “may” [implement in the future].

Bloomberg says the lobbyists for financial firms, who proposed the change, are essentially suggesting that regulators first “study the issue to see if it’s needed, then give regulators the option of imposing a ban.” (emphasis ours).

“Shall” is just one word, but it’s definitive. “May” implies that it’s followed by “or may not.” So if just that one word is changed to “may”, it wouldn’t be impossible for regulators to decide to opt out of reform and allow all banks to continue prop trading.

Today the Senate Banking Committee will begin considering amendments like these to Dodd’s financial reform bill.

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