Regular readers know that your humble blogger's recommendation to combine the language in the Volcker Rule prohibiting proprietary trading with requiring banks to provide ultra transparency and disclose on an ongoing basis their current global asset, liability and off-balance sheet exposure details is the simplest and most effective way to apply the Volcker Rule.
Anything more complicated than this provides the banks with rules that they can game to avoid being bound by the Volcker Rule.
The U.S. Treasury Department’s top official for domestic finance said regulators should seek “simplicity” in the so-called Volcker rule, which will restrict banks’ proprietary trading.
“We will strive for simplicity with Volcker and the other reforms we are implementing,” Mary Miller, the Treasury’s undersecretary for domestic finance, said at a conference today in Arlington, Virginia. “We understand its value. At the same time, we are mindful of the need to have smart rules that are responsive to the unique needs of our financial system and promote economic growth.”
The Volcker rule, named for its original proponent, former Federal Reserve Chairman Paul Volcker, is intended to reduce the chances that banks put depositors’ money at risk. ...
She said regulators should develop “simple” and “sophisticated” rules as they implement the 2010 Dodd-Frank law in response to the financial crisis. She said the financial system needs “smart regulation that can make future financial shocks less likely and less damaging -- and without unnecessary compliance costs.”Please reread the highlighted text as this is exactly what requiring banks to provide ultra transparency achieves.
As all market participants know, transparency is both 'simple' and 'sophisticated'.