Republican congressman Spencer Bachus has called for the Volcker rule to be revoked as he believes it will “hamper the ability of asset managers, pension funds and insurance companies to grow the value of their portfolios for millions of individual investors or retirees”.
The outgoing Financial Services Committee chairman, who was replaced at the start of the year by Republican Jeb Hensarling, shared his view in statement at the commission’s second Volcker rule hearing last month.
“The Volcker Rule is a self-inflicted wound that should be repealed. Unfortunately, the 112th Congress did not do that; the 113th should,” said Bachus in the statement.
Bachus has been a long time critic of the rule, having previously asked investors and industry professionals to offer ideas on how to formulate “a less burdensome legislative alternative” to Volcker back in August.
The rule, which restricts banks from trading off their own accounts as well as limiting their investments in private funds to no more than 3 percent of any one fund’s capital, has divided opinion and many private equity firms feared that they would lose banks as investors due to the regulation.
Among the rule's supporters includes heavyweight LP the California Public Employees’ Retirement System. Anne Simpson, the pension fund's senior portfolio manager, testified in front of a US Congressional committee in July, declaring CalPERS’ support for Volcker.
But the rule’s implementation hit a setback only weeks before Bachus’ statement when regulatory lawyers confirmed the delay of its final draft. The rule’s sheer complexity was cited as the primary reason for the holdup and the final draft is expected in the first quarter.
The delay raises further questions about banks ability to comply with the rule by July 2014. Gaps in some banks’ compliance programmes remain unfilled until final language becomes available, according to sources.