Senators replace Volcker Rule with Volcker Amendment

Sens. Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.) on Monday introduced what they deemed the "Volcker amendment" that would replace the 'Volcker Rule' contained in legislation reforming the financial sector. 

"This replaces the Volcker rule language, which was essentially a placeholder that said that what we will do is ask [regulatory] leaders to do a study, decided if there is an issue, and then tell us about what should be done," Merkley said. "What we are saying is we are declaring as a Congress that high-risk proprietary trading is inappropriate to have in the same house as a bank."

Named after former Fed Chairman Paul Volcker the rule is about banning proprietary trading. 

The senators today toughened the rule by using it to bar depository banks, bank holding companies, and their affiliates and subsidiaries from high-risk trading. It also requires massive capital reserves for non-banks making high-risk trades, and prohibits finance firms from betting against securities sold to their clients. 

Volcker approves of the amendment, saying in prepared remarks that he was "very encouraged by the efforts" of the senators to "clarify and enhance the proprietary trading restrictions" already in the reform bill authored by Senate Banking Chairman Chris Dodd (D-Conn.). 

Dodd also supports the amendment. 

Merkley and Levin expect there to be a vote on adding the measure to the reform bill.