U.S. regulators are considering changes to the "Volcker rule" that Wall Street has sought for years, including eliminating big banks' responsibility to prove they do not trade on their own account, according to several regulatory and industry sources.
Other modifications being considered include: making it clearer which types of funds banks are banned from investing in, permanently exempting some foreign funds from the ban, and anointing a lead regulator to oversee the rule's enforcement.
Part of the Dodd-Frank reform law passed after the 2007-2009 financial crisis, the Volcker rule aimed to prevent banks, such as Goldman Sachs and JPMorgan Chase, from making risky market bets while accepting taxpayer-insured deposits.
The rule forced many Wall Street banks to restructure their businesses, including overhauling their trading operations and hiving off billions of dollars' worth of investment vehicles.
Yet banks and some of their customers say the rule, which runs at more than 1,000 pages, is too much of a burden for the financial industry by limiting banks' ability to facilitate investments and hedges for investors and depressing trading volumes in some assets.
Congress is now considering a bill that would exempt lenders with under $10 billion in assets from the rule, but larger banks are lobbying for changes in how the rule is interpreted and applied to them. While financial regulators have said they agree on the need to revise the Volcker rule, some specific changes they are considering have not yet been reported.
Regulators are likely to release their proposals in coming months, in what is expected to be a milestone in President Donald Trump's promised push for less regulation that could save Wall Street billions of dollars.
"We're taking a fresh look at the Volcker rule," said Fed Chairman Jerome Powell before Congress on Tuesday.
The Fed, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have joint responsibility for enforcing the rule and broadly agree it could be simplified.
"There's unanimity on a need to act," said one banker briefed on the matter.
Congress wrote the Volcker rule into law but regulators have broad discretion to determine how to make that a reality through writing and enforcing the regulations.
Staff at the agencies have begun gathering data and have identified potential changes, according to several people familiar with the effort. Work will accelerate once Jelena McWilliams becomes FDIC chair, among the last of Trump's top financial nominees who should be confirmed by the Senate in the coming months.
"Youre going to see momentum start building and start building quickly," said Tom Quaadman, executive vice president with the U.S. Chamber of Commerce.
Spokesmen for the Fed, FDIC, OCC and CFTC declined to comment. The SEC did not respond to a request for comment.