U.S. Chamber, 26 Companies and Organizations Address Volcker Rule’s Consequences on Business
Letter to Regulators Highlights Five Specific Ways the Current Proposal Would Negatively Impact Main Street Businesses
WASHINGTON D.C.—The U.S. Chamber of Commerce joined with 26 of the nation’s leading companies and organizations today in a letter to the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Securities and Exchange Commission (SEC), Office of the Comptroller of the Currency (OCC), and Commodities and Futures Trading Commission (CFTC), highlighting the consequences for business in the proposed Volcker Rule. The letter’s signatories include businesses from a broad cross section of sectors that are warning the regulators about the rule’s likely negative impact on business growth and job creation.
“The undersigned companies and organizations, representing a diverse range of industries, believe that the Volcker Rule will have far-reaching negative consequences that will impede our ability to raise capital and manage risk,” the letter says. “As such, we urge regulators to refrain from implementing the rule in its current form, hold a roundtable with stakeholders representing different market participants, and re-propose the Volcker Rule to provide additional time to identify unintended consequences and craft policies to avoid them.”
The letter warns that the proposed Volcker Rule is likely to result in the following negative consequences for business:
• Impairment of Corporate Liquidity and Restricted Cash Management Activities – The rule may force financial institutions to curtail their participation in markets in order to avoid accidentally violating this complex and unwieldy law.
• Reduced Ability of Businesses to Raise Capital for Long-Term Growth – The rule would effectively reduce the marketplace for corporate debt and equities. Investors are likely to divert investment dollars only to those large firms that they feel are less likely to represent a liquidity risk.
• Higher Costs for Both Borrowers and Investors – The reduced market liquidity imposed by the rule would force companies that issue debt to pay higher rates in order to clear the market and investors would have higher costs when they sell their investments into a less liquid market.
• Undermining U.S. Competitiveness – Because no other nation is imposing such a regulatory infrastructure on their markets, businesses accessing U.S. capital markets will be placed at a competitive disadvantage.
• Treasury Carve-Out Validates Negative Impacts for Corporate Market – The rule exempts U.S. Treasury securities. Imposing the Volcker Rule’s restrictions only on the markets that are used by the corporate community is no way to advance our national interests.
Full text of the letter and list of 27 undersigned companies and organizations is available here:
http://www.centerforcapitalmarkets.com/wp-content/uploads/2010/04/2012-2.14-FINAL-Coalition-letter_Volcker-Rule-2.14.pdf
Since its inception in 2007, the Center for Capital Markets Competitiveness (CCMC) has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.