A retiring Senate Democrat wants a newly-created body within the Treasury Department to ensure that banks do not participate in large-scale proprietary trading.
Sen. Byron Dorgan (D-N.D.) wrote to the Financial Stability Oversight Council, created under the Dodd-Frank Wall Street Reform Act, asking it to ignore Republican-led calls to timidly enforce the “Volcker Rule,” which prohibits federally-insured banks from making speculative investments that are not in the interests of customers.
In his letter, Dorgan, who will be succeeded by Republican Governor John Hoeven in January, warns against a recommendation made last week by incoming House Financial Services Committee Chairman Spencer Bachus (R-Ala.) to delay implementation of the rule.
“In order to protect American taxpayers and stay true to the law’s intent, it is essential that the Financial Stability Oversight Council oppose the push by some for a watered-down ban on proprietary trading,” Dorgan wrote.
Bachus, who will replace Rep. Barney Frank (D-Mass.) as head of the powerful Financial Services panel when the GOP takes control of the House in the new year, wrote to Treasury Secretary Tim Geithner last week imploring him to review the impact of the ban on U.S. banks before settling on the degree to which it should be enforced.
“If the Volcker Rule’s prohibitions are expansively interpreted and rigidly implemented against U.S. institutions while other nations refuse to adopt them, the damage to U.S. competitiveness and job creation could be substantial,” wrote Bachus.
Under the law, regulators are not required to study the ban prior to its implementation. Dorgan’s request comes a week after fellow Democrats Sen. Carl Levin (Mich.) and Sen. Jeff Merkley (Ore.) sent Geithner a similarly-worded letter.