Former Federal Reserve Chairman Paul Volcker blamed financial lobbyists for overcomplicating the Volcker rule at a university talk in Singapore, according to a Reuters report.

The law is meant to ban banks from proprietary trading, although certain activities are permitted. The law is also meant to sharply curtail banks' ability to sponsor or own interests in hedge funds and private-equity funds.

The agencies' nearly 300-page proposal broadly defines "proprietary trading" as well as what constitutes the types of sponsorship and investments in hedge fund and private-equity funds that would be prohibited.

Certain investments would receive exemptions, including that done on behalf of a customer through advisory and asset-management services, and "de minimis" investments not exceeding 3% of a bank's tier 1 capital.

However, according to the Reuters report, Volcker said at the university talk that lobbying by the financial industry had made the proposed regulation much more complex than it needed to be.

"There is no set of lobbyists in the United States bigger, more important and more rewarded than the financial lobbyists," he said during the discussion.

U.S. regulators in general have been charged with over complicating issues that directly affect the securitization market.

At this year's Information Management Network's ABS East conference held in October, securitization industry players said that key issues, like risk retention, have been overcomplicated by Congress. These yet unsolved regulatory issues, industry players said, continue to create loan level uncertainty.

 

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