Factbox: Some rule changes now on go-slow due to U.S. shutdown

WASHINGTON (Reuters) – The ongoing federal government shutdown is impeding efforts to advance several rule changes that aim to make life easier for financial institutions.

Here are some projects stuck in regulatory limbo:

“VOLCKER RULE” OVERHAUL

Last year, the two markets regulators and three banking regulators agreed to review the “Volcker Rule”, a post-crisis rule barring banks from proprietary trading. The public comment period on simplifying the rule ended on Oct. 17, and the agencies are currently reviewing that feedback. However, relevant officials at the Securities and Exchange Commission and Commodity Futures Trading Commission are furloughed, meaning interagency work on the rule is stalled.

COMMUNITY BANK RELIEF FROM THE “VOLCKER RULE”

On Dec. 21, the same five regulators jointly proposed a separate rule that would exempt banks with less than $10 billion in assets and relatively light trading activity from the Volcker Rule. This proposal was mandated by legislation Congress passed in May. The rule must now be opened up to public comments for 30 days, but this cannot happen until it is published in the Federal Register where the majority of staff are furloughed.

TAILORING BIG BANK RULES

In October, the Federal Reserve proposed a new package to ease regulation on all but the nation’s largest banks, establishing four tiers of rules for institutions, with larger firms facing harsher restraints. The proposal implements a central part of May’s bank deregulation law.

The comment period for that proposal expires on Jan. 22, but the Fed will not be able to finalize that rule until the Federal Register is fully operational.

BROKERED DEPOSITS

On Dec. 19, the Federal Deposit Insurance Corporation (FDIC) finalized a new rule easing restrictions on deposits placed with banks by third party brokers. But that change cannot take effect until it is published in the Federal Register. At the same time, the FDIC also sought comment on whether it should further update its brokered deposit rules and related interest rate caps to better include technological changes. The FDIC gave the public 90 days to comment on potential changes, but that cannot kick off until it too is published in the Federal Register.

CORPORATE GOVERNANCE

Before the shutdown, the SEC said it was considering tweaking rules in two high-profile areas: quarterly reporting by public companies and shareholder voting rights. Both projects are in early stages, with the SEC soliciting initial feedback. But with most SEC employees furloughed, the shutdown has put those projects are now on go-slow.