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Simpler version of the Volcker rule needed, CFTC commissioner says

CFTC Commissioner Bart Chilton
CFTC Commissioner Bart Chilton

Federal regulators should quickly adopt a simpler version of the Volcker rule, said Bart Chilton, commissioner at the Commodity Futures Trading Commission in an interview Monday following a panel discussion at the Milken Institute Global Conference at the Beverly Hilton Hotel, Beverly Hills, Calif.

Mr. Chilton said he sent a letter to other agencies recommending the CFTC's assistance in writing the regulation, which has been languishing and has not received a response.

“We need to keep the regulations simple. We need to keep our eye on the big picture,” Mr. Chilton said. “The line between hedging and speculation (at the banks) is very thin.”

Current draft regulations are close to 240 pages long, whereas Mr. Volcker had said that the rule,which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed close to three years ago, should be four pages long, Mr. Chilton noted.

The Volcker rule limits certain banking entities' ability to make illiquid investments, such as alternative investments, as well as to retain in-house alternative investment groups.

As to Mr. Chilton's agency, work has been slowed by lobbying, lawsuits brought against the agency to stall implementation of regulations, underfunding of the agency by about $100 million and overanalysis by the agency, he said.

Regulators should keep their eyes on why regulations are being adopted in the first place, Mr. Chilton said. It is because, “we went to hell in a handbasket” during the financial meltdown.