CAGW Joins Coalition Letter in Support of Volcker Rule Relief | Council For Citizens Against Government Waste

CAGW Joins Coalition Letter in Support of Volcker Rule Relief

Letters to Officials

March 11, 2019

The Honorable Jerome Powell
Board of Governors of the Federal Reserve
20th Street and Constitution Avenue, NW
Washington, DC 20551

The Honorable Jelena McWilliams
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

The Honorable Joseph Otting
Office of the Comptroller of the Currency
400 7th Street, SW, Suite 3E-218
Washington, DC 20219

The Honorable Jay Clayton
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549

The Honorable J. Christopher Giancarlo
Commodity Futures Trading Commission
1155 21st Street, NW
Washington, DC 20581

Dear Ladies and Gentlemen:

As conservative and free-market organizations concerned with reducing red tape that is holding
back American entrepreneurs, consumers, and investors, we urge the above regulatory agencies
to reconsider the proposed implementation of the Volcker Rule and instead grant the broad
regulatory relief that President Trump and Congress intended.

Like much of the Dodd-Frank Act of 2010 from which it came, the Volcker Rule was a flawed
and unnecessary response to the financial crisis. It has imposed substantial burdens on industry,
predicted to be as high as $4 billion in regulatory costs, while damaging financial market
liquidity, raising the cost of credit for both businesses and consumers.

That is why Congress passed a key piece of financial legislation to reform the rule, known as the
Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. That Act was in
part based on a 2017 Treasury Department report that advocated lifting the Volcker Rule from
small and mid-sized American banks, as well as banks of all sizes that engage in limited asset

The Act also represents a legislative compromise between the House, which passed a full repeal
of the Volcker Rule under the Financial CHOICE Act, and the Senate, which initially introduced
a more limited reform.

The financial reform bill was one of President Trump’s key legislative victories and a critical
part of his record as one of the most deregulatory presidents in modern history. It was also the 
first significant piece of financial reform passed since Dodd-Frank. Therefore, it is imperative
that the regulatory agencies charged with implementing the statutory amendments faithfully
execute the mandates set forth by Congress.

Yet, despite the clear mandate from Congress and the president, the above federal regulators
have simply ignored the text of the legislation. While the legislation provides exemptions to the
Volcker Rule for banks under $10 billion in assets or banks that engage in limited asset trading,
the proposed rule would instead exclude only those banks that are under $10 billion in assets and
engage in limited asset trading.

Instead of following the clear text of the law, regulators are attempting to implement much less
regulatory relief than what Congress intended. The effect of changing the “or” to an “and” is
substantial: it would mean that the Volcker Rule would continue to burden not just Wall Street
behemoths, but many traditional banks serving their communities. This would constrain these
banks’ ability to reward savers and lend to consumers and small businesses.

Agencies do not have the authority to promulgate a regulation that conflicts with the underlying
law. To do so is an illegal encroachment on Congress’ legislative power. As Rep. Blaine
Luetkemeyer (R-MO), a member of the House Financial Services Committee, wrote in a letter to
the above regulatory agencies, “the agencies chose to rephrase the statutory language in a
manner that completely changed the meaning of the law that was enacted by Congress and
signed by the President.”

As a matter of law and policy, it is crucial that the above regulatory agencies implement the
correct statutory mandate as laid out in the Economic Growth, Regulatory Relief, and Consumer
Protection Act.

The below-signed organizations respectfully submit that the proposed rule be revised to exclude
banks with $10 billion or less in total consolidated asset or banks of all sizes that engage in
limited asset trading.

Some of the signatories will be sending separate comment letters elaborating further on ways to
reform the rule.


Kent Lassman
President & CEO
Competitive Enterprise Institute

Phil Kerpen
American Commitment

Richard Manning
Americans for Limited Government

Grover G. Norquist
Americans for Tax Reform

Norman Singleton
Campaign for Liberty

Timothy Lee
Vice President
Center for Individual Freedom 

Tom Schatz
Citizens Against Government Waste

Ashley N. Baker
Director of Public Policy
The Committee for Justice

Matthew Kandrach
Consumer Action for a Strong Economy

Jason Pye
Vice President of Legislative Affairs

Seton Motley
Less Government

Harry C. Alford
National Black Chamber of Commerce

David Williams
Taxpayers Protection Alliance

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