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WHEREAS, the Volcker Rule is a specific component
(Section 619) of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection
Act originally formulated, in part, by former US Federal Reserve Chairman Paul
Volcker; and WHEREAS, the
Volcker Rule essentially aims to restrict commercial banks from engaging in
speculative transactions that do not directly benefit their customers; and WHEREAS, the
Securities and Exchange Commission, the Federal Deposit Insurance Corporation,
the Office of the Comptroller of the Currency and the Federal Reserve were
tasked with designing the specific rulemaking that would implement the Volcker Rule
and issued a proposed form of the Rule for public comment which closed on
January 13, 2012 ; and WHEREAS, the
regulations are schedule to go into effect on July 21, 2012; and WHEREAS,
the proposed rule seeks to exempt municipal securities from the section related
to banking institutions engaging in certain proprietary trading activities in
keeping with the statute and Congress’ intent; and WHEREAS,
the proposed rule defines “municipal obligations” too narrowly as “obligations
of states and political subdivisions thereof” which is under-inclusive and
differs from the well-established and relied upon definition of municipal
securities that is found in the Securities Act of 1934; and WHEREAS,
if made final, the definition in the proposed rule would exclude thousands of
municipal securities, disrupting the municipal market and raising costs for
state and local governments; and WHEREAS,
given that one of the principal purposes behind the Volcker Rule is to mitigate
risk, the lack of uniformity would unfairly treat economically similar debt
instruments differently from one another for the purposes of municipal
securities trading; and WHEREAS,
expanding the definition of municipal security in the Volcker Rule would pose
no additional risk to banks or the banking system as municipal securities are
among the safest assets in the US capital markets. NOW, THEREFORE, BE IT
RESOLVED that those agencies tasked with the
final rulemaking amend the definition of municipal securities in the proposed
rule and have it align with the common definition of municipal securities found
in the Securities Act of 1934 that has served for the past 80 years. |
RESOLUTION ADOPTED JUNE 2012