Today, Monetary Policy and Trade Subcommittee Vice Chairman Bill Huizenga (MI-02) questioned Fed Chair Janet Yellen on the Volcker Rule and the competitive disadvantages it creates for the U.S. economy as she appeared before the House Financial Services Committee. Vice Chairman Huizenga pressed the Fed Chair for a specific timetable regarding how long the Federal Reserve would wait before examining the negative impact the Volcker Rule would have on the economy.
(Click on the picture above to watch the exchange)
Highlights:
How Long Will The Fed Standby and Allow The Volcker Rule To Put The U.S. At A Disadvantage:
Huizenga: How long are you comfortable waiting to see what will happen? Is it three months? Six months? A year? How long will we see liquidity leave the United States and lose that market share?
Yellen: Well, I think the banks will be able to go on as we implement this rule to engage in those activities, particularly market making and hedging that are really vital to a well functioning financial system.
Huizenga: But is there a length of time? That's what I'm looking for. How long are you interested in waiting to see its effectiveness? Its 932 pages. 297,000 words, there's a lot to wade through and a lot of interpretation.
Yellen: Well, we will be involved with the OCC and the SEC and other agencies in using supervision to make sure that firms do comply with the rule.
Huizenga: So, but an undetermined amount of time to see its effectiveness?
Yellen: Well, it will certainly take time to see what the effects of the rule are.
Huizenga: I'll follow up with a letter, because I would like you to put a little thought into exactly how much time. How long are we going to be at a competitive disadvantage is what I'm concerned about.
On The Cause Of The Financial Crisis:
Huizenga: Chair Yellen did short-term proprietary trading cause the financial crisis?
Yellen: I wouldn't say that short-term proprietary trading was the main cause of the crisis.
Huizenga: I'm sorry, it was not?
Yellen: I would not see that as the main cause of the crisis.
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