Agencies exclude community banks from the Volcker rule

The announcement—following a review of the controversial Dodd-Frank rulemaking that was mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act—was made jointly by the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and Securities and Exchange Commission.

The Volcker Rule generally restricts banking entities from engaging in proprietary trading and from owning, sponsoring, or having certain relationships with hedge funds or private equity funds. Under the now-final rule, unchanged from its earlier proposal, community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5 percent or less of total consolidated assets are now excluded from the rule.

The final rule also permits a hedge fund or private equity fund, under certain circumstances, to share the same name, or a variation of the same name, with an investment adviser as long as the adviser is not an insured depository institution, a company that controls an insured depository institution, or a bank holding company.