Life Industry Eyes Outcome of Dec. 10 Vote on Volcker Rule
December 10, 2013 by Jeff Jeffrey
WASHINGTON – Five federal agencies are set to vote Dec. 10 on whether to approve the Volcker rule, which would restrict financial institutions’ ability to make certain trades and investments. The vote is being watched closely by the life insurance industry because it could affect some investment strategies.
The Volcker rule, named for former Federal Reserve Chairman Paul Volcker who initially proposed it, forms a key part of the Dodd-Frank financial reform act.
The Volcker Rule would bar financial institutions from making certain kinds of speculative investments that do not benefit their customers. The insurance industry, particularly in the life sector, has called for more clarity on how the rule would affect their investments (Best’s News Service, Oct. 29, 2013).
Some worry that life insurance companies will be caught up in the rule as it appeared in early drafts.
Jack Dolan, a spokesman for the American Council of Life Insurers, said his organization intends to review the results of the vote “as soon as it is made public.”
“We anticipate it will be quite long and complex, so it will likely take a little while before getting through it,” Dolan said. “As we have stated before, we are hoping it reflects a recognition that the investment activities of life insurance companies is central to the overall insurance business model and could be unduly disrupted if certain provisions of the Volcker Rule were applied.”
Treasury Secretary Jacob J. Lew issued an instruction in July that a final version of the Volcker rule should be completed by year’s end. The agencies responsible for drafting the rule are the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation and the Comptroller of the Currency.
(By Jeff Jeffrey, Washington Bureau manager: jeff.jeffrey@ambest.com)
MarketWatch will be live-blogging the unveiling of the Volcker Rule, the rule prohibiting proprietary trading by banks. Follow along as the rule is unveiled and reaction pours in on what it means to markets and to banks, particularly the largest ones including Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, Wells Fargo