Revised Choice Act continues to target Volcker

The act that will reverse many Dodd-Frank provisions is likely to reach the floor by July.

A bill that could eliminate the Volcker Rule will be presented to the House by the end of April, its author Congressman Jeb Hensarling said on Tuesday.

The Financial Choice Act could ease a number of the regulatory standards enacted through the 2010 Dodd-Frank Act, including the rule that restricts the amount of tier 1 capital banks can hold in private investments.

The Choice act was due to be introduced in mid-February but the date was pushed back for “modest changes.” These changes were presented to lawmakers on Tuesday, with the Volcker Rule provision intact. It is likely to reach the floor for a vote by June or July.

Further fueling the case for eliminating the rule, outgoing Federal Reserve governor Daniel Tarullo said there was scope to reform the Volcker Rule because it is damaging market-making activities at banks.

“Although the evidence is still more anecdotal than systemic, it may be having a deleterious effect on market making, particularly for some less liquid issues,” the Fed’s top bank supervisor said during his exit interview this week.

The involvement of five different agencies in carrying out its provisions, difficulties establishing whether trades were legitimate market-making, and the application of the rule to a broader group of banks than was necessary, are among the complications, Tarullo said.

The entry into force of the Volcker Rule in 2015 prompted a widespread sell-off of private equity assets by big banks.