Clearing up any confusion about where he stands, White House economic adviser Paul Volcker sent a simple note to Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.) on Wednesday, giving them his full support for an amendment that will ban banks from trading taxpayer-backed money for their own profit.
The letter reads, in its entirety: "I am fully in support of the Merkley-Levin amendment, which will clarify and enhance the proprietary trading restrictions contained within the Dodd Bill."
The prop-trading ban is known as the "Volcker Rule."
On Tuesday, Volcker expressed his opposition to attempts to weaken the language in the underlying bill, while praising the effort by Levin and Merkley. His Wednesday letter makes his position that much clearer.
The amendment's authors argue that their fix is needed because the Dodd bill allows regulators to "modify" restrictions on proprietary trading. Giving regulators such leeway could -- depending on the regulator -- make the law meaningless. Writing the restrictions directly into law removes that uncertainty.
The amendment has navigated a Senate obstacle course. When it appeared that it had little support, it was offered a vote with a threshold of 50, a simple majority. When support approached 50, the threshold was bumped up to 60. When support approached 60, it was denied a vote due to Republican objections. As a last resort, Merkley and Levin attached the amendment to one that was in line to get a vote: A measure from Sen. Sam Brownback (R-Kan.) that would exempt auto dealers from consumer financial protection oversight.
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