'Volcker Rule' Has Two-Year Grace Period, Fed Says
WASHINGTON--The Federal Reserve said Thursday that banks will have a full two years to bring their activities in line with the so-called Volcker rule before regulators start enforcing it, a formal statement aimed at calming bank fears that they would be forced to act before a July deadline.</br></br>The Fed and other banking regulators said banks will have until July 21, 2014, "to conform all of their activities and investments" to the Volcker rule, which restricts U.S. banks from trading with their own money.</br></br>"During the conformance period, banking entities should engage in good-faith planning efforts" to make sure they are in line with the restrictions no later than that date, the Fed said.</br></br>At issue is a legal worry raised by the fact that regulators are unlikely to have their final regulation implementing the Volcker rule by the July deadline set out in the 2010 Dodd-Frank financial law. The provision is set to take effect on July 21, whether or not regulators have the details hammered out by then. That raised a concern among some banks and their lawyers that banks might need to change some activities ahead of the final rule in order to not violate the law.</br></br>The Fed clarified that banks will have a full two years from the July deadline before regulators will enforce any aspect of the rule. Under the law, the Fed can decide to extend that period for up to three years.