In my last post, I was discussing the public comments on the Volcker Rule, specifically Table 3, included again in this post, which shows the breakdown of comments by word count, and Chart 1, which displays this information graphically, showing the distribution of word count by: private individual not using the PC form (in red), private individuals using the form (in blue), and all others (in green).
As noted, the spike at comments of less than 50 words are all (with one exception) letters from private individuals. As you might expect in a comment of less than 50 words, these are short, non-substantive, and provide no meaningful guidance or relevant information to regulators, beyond the fact that members of the public continue to be angry about the financial institution bailouts.
To illustrate, the shortest comment received by FSOC, from a member of the general public, is only a single word: “regulate!” In contrast, the longest comment, received from SIFMA (the Securities Industry and Financial Markets Association) measures 19,500 words and advises FSOC that:
the key definitions in this [the hedge and private equity] portion[s] of the Volcker Rule are generally overbroad: they sweep in entities and vehicles that Congress never intended to be treated as hedge funds or private equity funds and which Congress expected the implementing agencies to exclude from the general definition through the exercise of their regulatory discretion.
In between these two extremes lie the comments to the right end of Chart 1, nearly all of them from industry (or the occasional public interest group, think tank, or academic). These industry and trade group comments are lengthy, contain cogent arguments on behalf of a generally narrow interpretation of the Volcker Rule’s scope of prohibited activity, advance detailed legal arguments relying on numerous statutes and cases, reference the Dodd-Frank legislative history, and often contain detailed empirical data.
In contrast, comments from the general public tend to be short (the average word count, excluding the PC form letters, is 86), lack specific suggestions or recommendations for interpreting and implementing the Volcker Rule, generally urge that the rule be “enforced” or “adopted,” and express anger over bank risk-taking and the resulting bailouts that followed. One letter, stating “Reinstate the Volcker Rule!” is typical. Others are amusing.
in regards to the Volker Rule, just how stupid do you think the working class is? we just passed the two bills of financial reform and here, not even 3 months later, you big banks are at it again to screw joe the plummer.
Said another: “Being the crooks you are you will ignore this.” And finally, one of my favorites:
I support the Volker Rule. I also support a Barney Frank rule which states that congressmen and senators should make no law or rule or provision what states that every citizen the United States has a right to have a home. . . . PS - I still cannot believe that he won re-election. Cannot believe people are that stupid. Regards, Frank
To put all of this into context, the Volcker rule comment process was, in many ways, an astonishing campaign victory for public interest groups generally and Public Citizen, particularly. This display of private individual interest in the Volcker Rule – a rather arcane and technical piece of legislation – is somewhat astonishing. Unlike consumer protection or executive compensation, proprietary trading and hedge fund investments by banks are not sexy topics, even post-crisis. The average consumer likely has no idea what proprietary trading is, much less what sorts of risks it might pose to the financial system.
At the same time, however, this series of posts aims to illustrate how, even under these favorable circumstances, it is optimistic to think that such public-interested efforts can counterbalance the extraordinary influence and lobbying power that affected financial institutions are bringing to bear on important issues of financial reform, such as those embodied in the Volcker Rule. There’s too much at stake for industry, and they have the money, the information, and power.
In my next post, I’ll discuss the next phase in the Volcker Rule gap-filling game: the agency meeting logs.
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