Board of Governors of the Federal Reserve System

I supported exempting community banks from the Volcker rule provisions and have voted to implement changes mandated by law. I do not support the final rule because it weakens the core protections against speculative trading within the banking federal safety net. I am concerned the final rule would materially reduce the scope of covered activity, excessively rely on firms' self-policing, and narrow the Chief Executive Officer (CEO) attestation requirement, which together could substantially weaken the Volcker rule prohibition on proprietary trading.

I was surprised that the final rule eliminates, without replacement, the "short-term intent" test for most entities, as this change was not proposed in the notice of proposed rulemaking. By eliminating the standalone "short-term intent" test for firms engaged in higher levels of trading activities, the final rule materially narrows the scope of covered activities.

I am concerned about examiners' ability to assess compliance with the final rule because it relies on firms' internal self-policing to set limits to distinguish permissible market making from illegal proprietary trading, no longer requires firms to promptly report limit breaches and increases, and narrows the scope of the CEO attestation requirement.