Office of the Comptroller of the Currency Chief John Walsh believes the Volcker Rule would leave U.S. banks flat-footed.
At a hearing in Washington today on the rule’s most recent draft, Walsh said the measure would put American institutions at a competitive disadvantage with overseas lenders.
“Foreign jurisdictions have not adopted restrictions resembling those in the Volcker Rule, he said. “So a foreign bank that is not subject to section 619 because it does not have the requisite U.S. banking operations will remain unaffected by the Volcker Rule.”
Named after former Federal Reserve Chairman Paul Volcker, the rule would ban propietary trading, hedge funds and private equity operations at retail banks. U.S. banks would only be able to engage in prop trading abroad under very specific circumstances.
Barring revisions, the rule will take effect in July. The comment period on the legislation was just extended to Feb. 13.