(The following is a reformatted version of a press release
issued by The U.S. Securities and Exchange Commission and
received via electronic mail. The release was confirmed by the
Statement Regarding Adoption of Rule Implementing the Volcker
Commissioner Kara M. Stein 
Dec. 10, 2013 
I am pleased that the Securities and Exchange Commission (SEC)
will today join its fellow federal financial regulators in
finalizing important protections against the risks and conflicts
of interest inherent in banks’ proprietary trading and
relationships with hedge funds and private equity funds. 
This has truly been a team effort.  I would like to congratulate
the SEC team, which includes John Ramsay, Jim Burns, Gregg
Berman, Angela Moudy, Josephine Tao, Caite McGuire, Jennifer
Palmer, Lisa Skrzycki, Norm Champ, Diane Blizzard, Dan Townley,
Jane Kim, Brian Johnson, Marian Fowler, Amy Starr, Katherine
Hsu, and David Beaning for their great work in getting this rule
done.  I also would like to thank Chair White’s staff, including
Liban Jama, Jennifer McHugh, and Nathaniel Stankard for working
with me and my counsels, Ty Gellasch and Michael Spratt, so
intensively for these past several months.  Finally, I would
like to thank the superb staff of the other federal financial
regulators, as well as the thousands of commenters, who have
helped get us to this point.  Drafting this rule has not been
easy, but it has been important work.  Our financial system and
our economy will be safer because of all of your efforts. 
Eighty years ago, in the aftermath of the Great Depression,
Congress passed the Glass-Steagall Act to erect a wall between
the commercial banking system and the securities and insurance
businesses.  This wall worked fairly well for over 50 years.
Then, over time, many began to question why that separation
existed.    The world had changed and become more interconnected
and global.   Many said that the wall was no longer needed. 
So, amidst a broader deregulatory push, the Glass-Steagall Act
was slowly chipped away.  As chunks of the wall separating
commercial banking from other financial services were removed,
nothing bad seemed to happen.  Emboldened, regulators continued
to dismantle the wall until Congress was ultimately asked to
finish the job.  Finally, in November 1999, Congress removed the
last vestiges of the wall with the passage of the Graham-Leach-Bliley Act.  The new era of the universal bank was born. 
Some predicted disaster.  But those cautionary voices were
drowned out by the overwhelming cries for unfettered competition
and financial innovation.  Fewer than ten years later, the
doomsayers were proven right.  The financial crisis and the
Great Recession that followed cost millions of Americans their
jobs and their precious retirement funds.  Despite trillions of
dollars in government bailouts of the largest financial firms,
the crisis and recession ultimately have cost Americans an
estimated 13-22 trillion dollars.  The enormity of this
financial devastation has been overwhelming, even to those who
have sought to estimate the costs of the damage. 
In the aftermath of this economic wreckage, Paul Volcker, the
former Chairman of the Federal Reserve Board of Governors,
proposed that regulators restore protections against the risks
posed by banks’ proprietary trading and conflicts of interest.
President Obama agreed, and urged Congress to include what
became known as the “Volcker Rule” in its financial regulatory
overhaul.  Senators Jeff Merkley and Carl Levin drafted the
statutory language for the Volcker Rule, and a majority of the
members of the House of Representatives and the Senate joined
together in adopting it.  The rule we are adopting today to
implement that statute is the result of much thought and hard
Some have suggested that we should second-guess Congress’ clear
direction by engaging in our own analysis of the potential,
theoretical impacts of this rule.  Congress has spoken on this
point.  Congress decided to draft the rule as an amendment to
the Bank Holding Company Act.  Congress also could have amended
the Securities Exchange Act, which would bring with it a set of
analyses.  It did not.  Rather, Congress elected to direct all
five agencies tasked with rulemaking authority to adopt the rule
pursuant to the Bank Holding Company Act.  Although Congress did
not yet know how costly the Great Recession would be at the time
it passed the law, Congress nevertheless determined that the
Volcker Rule was necessary to help prevent another economic
catastrophe.  We cannot and should not seek to overrule that
judgment, nor should we seek to undermine or shirk our statutory
obligation to faithfully implement this Congressional directive. 
I think it is also worth mentioning that while all of the
regulators today are adopting the same rule, such joint action
is not necessarily required by the statute.  Rather, the
statute, while it requires coordination, consistency, and
comparability, also allows for the banking regulators to adopt
one rule, the Commodity Futures Trading Commission to adopt
another version, and the SEC to adopt yet another.  While all
five regulators have separately and reasonably determined that
it makes the most sense to proceed with a consistent rule,
Congress expressly granted authority to the banking and
financial markets regulators to implement the rule in a manner
that is faithful to their statutory mission. 
Some have argued that this rule will unnecessarily restrict the
provision of financial services to the American families and
businesses that currently rely on banks to provide them.   These
concerns are belied by the fact that families and businesses
received those services from numerous and diverse financial
services providers during the period when the Glass-Steagall Act
was in effect, and the US economy grew to be the strongest in
the world.  In addition, Congress did not simply re-adopt the
Glass-Steagall Act.  Rather, it decided to restore and provide
new protections to cover activities like derivatives trading,
while still permitting banks to provide certain customer-centered financial services.  However, these permitted
activities, such as market making and underwriting, are to be
subject to restrictions and limitations intended to ensure that
they do not give rise to significant risks to the banking
entities or the financial system. 
In the months and years ahead, I expect the SEC and the other
financial regulators to continue to provide guidance to market
participants and to refine these protections.  With our efforts
today, we are taking a critical step towards protecting American
families and businesses from unnecessary and inappropriate
conflicts of interest and proprietary trading gone awry.  If
these protections, as they may be refined over time, aren’t
adequate to fulfill that objective because of legal challenges
or other work-arounds, then it will be up to us as regulators to
consider more clear, bright-line alternatives going forward.
The American people deserve no less. 
(bjh) NY 
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