resident Barack Obama talks with Paul Volcker, Chair of the President’s Economic Recovery Advisory Board, following the Economic Daily Briefing in the Oval Office, Jan. 28. 2009. (Official White House Photo by Pete Souza)

The overly complex and opaque Volcker rule is finally getting a review. The Fed and the other agencies tasked with enforcing the Volcker rule are working together on a long overdue examination of the rule’s complexity and effectiveness. Lalita Clozel reports at The Wall Street Journal:

The Federal Reserve is considering “broad revisions” to how banks comply with a rule that prevents them from engaging in certain types of trading and investing.

“I believe the regulation implementing the Volcker rule is an example of a complex regulation that is not working well,” Fed Vice Chairman for Supervision Randal Quarles said in prepared remarks for a speech Monday at an annual international bankers’ conference. “We would like Volcker rule compliance to be similar to compliance in other areas of our supervisory regime,” he added.

The Volcker rule is implemented by five separate agencies, and changing it would require a joint effort by those regulators. In August, the Office of the Comptroller of the Currency asked for public feedback on ways to modify the rule.

Mr. Quarles said the Fed was now working in “full cooperation” with the other agencies on a new proposal “that would make material changes to the Volcker rule regulations.”

The rule bars banks from investing in certain funds and says their trading activities can’t outstrip their customers’ demand.

Mr. Quarles specifically said regulators are re-evaluating how they measure compliance with key aspects of the rule, such as which bank-owned investment funds are covered by it and how a bank calculates the “reasonably expected near-term demand” of its customers.

Read more here.