Janet Yellen takes the oath of office, administered by Governor Daniel Tarullo, on March 5, 2014.
In a farewell speech, the outgoing head of regulation at the Fed, Dan Tarullo, finally copped to damaging impact the Volcker rule has had on market functioning. The Volcker rule was intended to ban proprietary trading at commercial banks, but the rule was written so poorly that it has paralyzed banks from making markets in many fixed income instruments.
The FT reports
The Fed’s top bank supervisor leaves on Wednesday following eight years in which he earned a reputation as a tough enforcer and key player in the ramping up of regulatory requirements following the financial crash…
“Several years of experience have convinced me that there is merit in the contention of many firms that, as it has been drafted and implemented, the Volcker rule is too complicated,” Mr Tarullo said. “Although the evidence is still more anecdotal than systematic, it may be having a deleterious effect on market making, particularly for some less liquid issues.”
Read more here.