31 Senate Democrats push back on Trump Administration attempts to weaken the Volcker Rule

 

WASHINGTON, D.C. – U.S. Senators Jeff Merkley (D-OR) and Jeanne Shaheen (D-NH) today led a group of 31 Senators to push back on the Trump administration’s recent efforts to weaken the Volcker Rule, one of the landmark provisions of the 2010 Wall Street reform law.

Merkley, along with former Sen. Carl Levin (D-MI), is a co-author of the Volcker Rule, which was co-sponsored by Shaheen. The Volcker Rule requires banks to separate hedge fund-like activities from traditional banking.

“We write to express our strong disappointment with the recent effort to weaken the Volcker Rule, which prohibits risky trading practices at federally-backed institutions,” wrote the Senators in a letter to five financial regulators. “We are concerned that the proposed rule,released on May 30 by the Federal Reserve, would undermine a fundamental provision of the Dodd-Frank Wall Street Reform Act that prevents taxpayers from being asked to bail out financial institutions that make high-risk trades.”

The Senators noted that the proposed rule could open major loopholes for the biggest banks to avoid complying with core financial protections.

“To protect taxpayers and the economy, Congress enacted the Volcker Rule to separate traditional banking from these risky trading practices,” the Senators continued. “The Volcker Rule’s ban on high-risk trading by large, federally insured banks was a key provision of the Dodd-Frank Wall Street Reform Act intended to ensure that American taxpayers would never again be on the hook when Wall Street banks gamble.”

In addition to Merkley and Shaheen, the letter was signed by Senators Kirsten Gillibrand (D-NY), Dianne Feinstein (D-CA), Elizabeth Warren (D-MA), Tina Smith (D-MN), Cory Booker (D-NJ), Chris Van Hollen (D-MD), Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Kamala Harris (D-CA), Edward J. Markey (D-MA), Bob Casey (D-PA), Maggie Hassan (D-NH), Ron Wyden (D-OR), Bob Menendez (D-NJ), Maria Cantwell (D-WA), Mazie Hirono (D-HI), Ben Cardin (D-MD), Bernie Sanders (I-VT), Patrick Leahy (D-VT), Tammy Baldwin (D-WI), Brian Schatz (D-HI), Catherine Cortez Masto (D-NV), Jack Reed (D-RI), Sheldon Whitehouse (D-RI), Dick Durbin (D-IL), Martin Heinrich (D-NM), Tom Udall (D-NM), Bill Nelson (D-FL) and Amy Klobuchar (D-MN).

The full text of the letter is available here and below.

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Dear Chairman Powell, Chair McWilliams, Comptroller Otting, Chairman Clayton, and Chairman Giancarlo:

We write to express our strong disappointment with the recent effort to weaken the Volcker Rule, which prohibits risky trading practices at federally-backed institutions. We are concerned that the proposed rule released on May 30 by the Federal Reserve would undermine a fundamental provision of the Dodd-Frank Wall Street Reform Act that prevents taxpayers from being asked to bail out financial institutions that make high-risk trades.

Reckless gambling on Wall Street played a major role in the financial crisis and resulted in massive taxpayer bailouts. To protect taxpayers and the economy, Congress enacted the Volcker Rule to separate traditional banking from these risky trading practices. The Volcker Rule’s ban on high-risk trading by large, federally insured banks was a key provision of the Dodd-Frank Wall Street Reform Act intended to ensure that American taxpayers would never again be on the hook when Wall Street banks gamble.

The proposed rule issued by the federal banking regulators is not a minor change or an attempt to cut red tape for community banks and credit unions. Instead, it creates potentially major loopholes for Wall Street banks to avoid complying with a core protection put in place by Congress to protect taxpayers and investors. Loosening the Volcker Rule for Wall Street banks opens the door for them to once again engage in risky trading behavior and put the financial stability of our economy at risk.

As you consider any potential changes to the Volcker Rule, we urge you to consider the potential ramifications of risky trading practices at federally insured institutions.