Volcker Rule - CFTC - Comment Letter - Sheila Bair - May 31, 2012

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Dodd-Frank Timeline, "Volcker Rule," CFTC
Proposal Date Comment Deadline Final Rule Released
February 14, 2012 April 16, 2012 December 10, 2013

CFTC Volcker Rule Roundtable CFTC
May 31, 2012

On May 31, 2012, the CFTC held a staff roundtable on the Volcker Rule. As a participant in the session, former FDIC Chair Sheila Bair submitted her comments in a letter to the commission.

From the comments:

“Ideally, insured banks would be restricted to traditional commercial banking activities such as deposit-taking, lending, payments processing, and wealth management. These are activities with clear economic value and there is a longstanding public policy interest in having insured deposits support them. This is not to say they cannot also be susceptible to excess risk taking, but they are well understood by management, investors, and bank examiners.”

Regarding the hedge exemption:

  • "Hedges must be identified as such when they are undertaken. The banking organization must also identify the specific risk exposure it is hedging, which must be reasonably correlated to the hedge itself."
  • "Any compensation based on hedging profits should be banned."

References

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