On Wednesday, the House passed a bill that would further delay the full implementation of the Volcker Rule – a highly controversial rule introduced under the Dodd-Frank Wall Street Reform and Consumer Protection Act that prohibits banks from engaging in proprietary trading and from holding certain investments. With the passage of this bill, compliance with the Volcker Rule’s provision prohibiting banks from holding collateralized loan obligations would not be required until 2019, a two-year delay. It is estimated that the total collateralized loan obligation market totals somewhere between $84 billion and $105 billion, most of which is held by banks subject to the Volcker Rule.
Even though the House passed this bill, it is unlikely that the bill will survive the president’s desk, even if it passes in the Senate. On Monday, the White House announced that President Obama would veto the bill if it makes it to his desk. It is important to note that the bill is part of a compilation of 11 bills aimed at softening the Volcker Rule, and that most of the other bills passed the House by wide margins in 2013 and 2014. Fighting over the implementation and scope of the Volcker Rule is nothing new. The passage of this bill and the president’s announcement make it clear that tension and fighting over the implementation of the Volcker Rule is not likely to go away any time soon.