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Congressional Gridlock
That agency and the U.S. Treasury Department adopted a merchant-banking rule in 2001 after the 1999 Gramm-Leach-Bliley Act gave banks the right to make such investments. But making statutory changes to merchant banking and other industry laws would require intervention from lawmakers — a tall order in a politically-divided Congress that has passed only a few significant bills affecting the financial system in recent years. That leaves any immediate impact of the report in doubt.
The Fed, OCC and the Federal Deposit Insurance Corp. were required by Dodd-Frank to dig into further risks from bank investments, and they were supposed to issue the report almost five years ago.
The document was called for by a provision tucked more than 200 pages into Dodd-Frank under section 620. Lenders’ government watchdogs had to review the industry’s investment activities to determine whether they “could have a negative effect on the safety and soundness” of the financial system. But the mandate was easy to lose track of next to the passage that preceded it: section 619, which is better known as the Volcker Rule.
Goldman Sachs, Morgan Stanley and JPMorgan were the targets of criticism that led to the 2014 Senate review of their commodities businesses. It found lenders used their ownership of metals and other physical commodities to dominate markets and gain unfair trading advantages. The physical commodities businesses at Goldman Sachs and Morgan Stanley were protected by grandfathering that allowed them wider abilities than most banks — an advantage the Fed is seeking to end.
entire report: http://www.bloomberg.com/news/articles/2016-09-08/u-s-banks-face-series-of-post-volcker-proposals-from-regulators