There is a good chance that the sweeping U.S. financial reform bill will be passed in a reasonable form, White House economic adviser Paul Volcker said on Wednesday, adding the bill could provide a basis for international coordination on coherent legislation.
This is a battle. Make no mistake about it, the former Federal Reserve chairman said at a conference here.
But I do think that if we can get this bill passed in a reasonable form, and the prospects to me look pretty good, I think that we'll provide a basis for the other major countries to get together in a way that wasn't possible before.
With the United States showing some leadership here, Volcker added, I hope that we will see progress among the other major financial markets anyway in adopting legislation that fits in coherently with the American approach.
The proposed Volcker rule being debated by U.S. lawmakers would ban risky proprietary trading unrelated to customers' needs at banks that receive government backing; bar banks from sponsoring hedge funds and private equity funds, and limit big banks' future growth through a new cap on market share.
Volcker, addressing The International Economic Forum of the Americas, said there is no basis yet for business as usual in U.S. and European financial markets, despite some economic growth over the last year.
VOLCKER WANTS NO EXEMPTIONS
New tensions surfaced over the proposed regulation this week after Volcker said in a letter he firmly opposes exemptions to his rule being sought by banks, which say they make only small investments in private equity and hedge funds.
The Senate version of the bill endorses the Volcker rule, but permits market-making and customer facilitation. Democrats have moved to toughen it by reducing the latitude given to regulators in implementing it once it becomes law, which now appears all but certain.
All this comes as a U.S. congressional conference committee prepared for its first meeting on crafting a final version of the bill -- the largest banking revamp since the 1930s.
(Reporting by Jonathan Spicer; Editing by Jan Paschal)