Volcker Rule muzzled — for now

Interim rule issued Jan. 14 offers reprieve
Nominate a Top Woman in Business. Click here. Nominate an NEPA business professional under 40. Click here.

For the Record

Sign up now for full access to Local Business Deeds, Bankruptcies, New Incorporated and Local Stock Activity from the Northeast Pennsylvania Business Journal. (read more)

20 Under 40: JenniferDessoye

Photo: N/A, License: N/A, Created: 2016:11:17 11:10:02

Dr. Jennifer Dessoye is assistant professor of occupational therapy at Misericordia University and owner of Bright Beginnings Early Learning Academy (BBELA). Discontent with the early education curriculum and understanding of human development and neurolo (read more)

20 Under 40: Amy Hlavaty Belcher

Photo: N/A, License: N/A, Created: 2016:11:09 13:55:46

Amy Hlavaty Belcher, 39, owner and artistic director of Abrabesque Academy of Dancing, believes that for those who have been given much, much is expected. “I just try hard to do my best,” she said. I have been blessed with many opportunities and many gift (read more)

20 Under 40: Christopher Hetro

Photo: N/A, License: N/A, Created: 2016:11:14 11:21:35

Chris Hetro, 33, works hard and plays hard. “A strong work ethic is important, but finding balance outside of work is important because life is too short and you need to enjoy it,” he explained. As an electrical engineer and project manager at Borton-Laws (read more)

20 Under 40: C. David Pedri

Photo: N/A, License: N/A, Created: 2016:11:14 15:19:17

For attorney C. David Pedri, 37, it’s all about a combination of qualities that contribute to success. “My philosophy is simple: be open and honest, treat people the way you would want to be treated, with respect, and work hard to attain your dreams. The (read more)

20 Under 40: Ed Frable

Photo: N/A, License: N/A, Created: 2016:11:09 11:13:04

Ed Frable, 28, believes “if I work hard and stick to my word, good things will happen. My crew will not be deterred. We will re-evaluate our game plan and not give up until the job is complete,” explained Frable, the owner/operator of Ed Frable Constructi (read more)

20 Under 40: William H. Bender II

Photo: N/A, License: N/A, Created: 2016:11:16 13:11:08

William H. Bender II, CFP, CIMA, CRPC, loves what he does. “I’m lucky. I come to work every day excited to help the people and institutions we work with,” explained Bender, 34, first vice president at Bender Wealth Management Group, Merrill Lynch. The fam (read more)

20 Under 40: Angelo Venditti

Photo: N/A, License: N/A, Created: 2016:11:14 16:09:11

Angelo Venditti, 38, heard a call to the helping professions early on. Geisinger Northeast’s chief nursing officer answer was to volunteer for his local fire company. After high school, he became a paramedic, then enrolled in nursing school. Three years a (read more)

20 Under 40: Donald Mammano

Photo: N/A, License: N/A, Created: 2016:11:17 12:38:37

At 20, Donald Mammano began his own company, while attending the University of Scranton. Mammano, now 33, and president of DFM Properties, recalls, as a youngster, holding a flashlight while his father fixed the kitchen sink. “From that point on I was fas (read more)

20 Under 40: William J. Fennie III

Photo: N/A, License: N/A, Created: 2016:11:15 09:50:19

William J. Fennie III, 27, is always knocking on the proverbial door, because he knows one day, one will open. As an investment specialist with Integrated Capital Management (iCM) he cannot take “no” for an answer. “I make cold calls every day to invite f (read more)

20 Under 40: Marcus Magyar

Photo: N/A, License: N/A, Created: 2016:11:14 13:25:24

As an advisor at CAPTRUST Financial Advisors, Marcus N. Magyar, CFP, 30, provides comprehensive wealth management and investment portfolio services to business owners, executives, families and high-net worth individuals. His multi-disciplinary team of pro (read more)

20 Under 40: Heather Davis

Photo: N/A, License: N/A, Created: 2016:11:10 13:34:44

Heather M. Davis, 33, director of marketing and communication, is responsible for creating, overseeing and implementing a strategic marketing and comprehensive communications plan for The Commonwealth Medical College (TCMC). She is also responsible for pr (read more)

20 Under 40: Alexandria Duffney

Photo: N/A, License: N/A, Created: 2016:11:14 14:24:50

Alexandria Duffney, 30, is competitive by nature and loves a good challenge. These qualities have led her to her position as associate director of graduate admission at Wilkes University. Here she works with prospective students interested in enrolling in (read more)

20 Under 40: John Culkin

Photo: N/A, License: N/A, Created: 2016:11:07 17:18:26

John Culkin’s tenets inform: “Less haste equal more speed; the same boiling water that softens the potato hardens the egg, it is all about what you are made of, not the circumstances surrounding you; and don’t ask someone to walk a mile in your shoes, bef (read more)

20 Under 40: Conor O'Brien

Photo: N/A, License: N/A, Created: 2016:11:14 17:19:58

“What could be worse than getting to the end of your life and realizing you hadn’t lived it,” mused Conor O’Brien.” As co-founder and executive director of the Scranton Fringe Festival, O’Brien, 25, is responsible for leading the development of the overal (read more)

20 Under 40: Jessica Siegfried

Photo: N/A, License: N/A, Created: 2016:11:10 14:12:08

Jessica Siegfried, 38, is senior designer with BlackOut Design Inc., where she is responsible for all creative design at the full-service agency, from traditional branding and print to collateral and front end web design. “I’ve always had an interest in t (read more)

20 Under 40: David Johns

Photo: N/A, License: N/A, Created: 2016:11:08 10:15:37

David Johns’ career path has been shaped by his diverse experiences. As director of structural engineering at Greenman-Pedersen Inc., Moosic, Johns, 39, ensures that his engineering and consultant teams provide clients with their best effort. “We complete (read more)

20 Under 40: Robyn Jones

Photo: N/A, License: N/A, Created: 2016:11:14 12:41:32

Robyn Jones, 38, president of ReferLocal LLC, has learned just as many lessons from her business successes as she’s had from her failures — and she believes it’s important to share that knowledge with her employees. After graduating from American Universi (read more)

20 Under 40: Nisha Arora

Photo: N/A, License: N/A, Created: 2016:11:14 10:02:06

Nisha Arora, 36, tries to be the best version of herself every day. As general counsel for ERA One Source Realty Inc., she realized she cannot control other’s behavior so “I try to focus on myself and how I can be better,” she explained. Arora’s responsib (read more)

20 Under 40: Justin Sandy

Photo: N/A, License: N/A, Created: 2016:11:10 14:59:27

Starting at a young age in Hazleton, Justin C. Sandy, 33, found a passion for running. He became a member then a coach for Misericordia University’s cross country and track and field programs. “It was at Misericordia that I also garnered the profound sati (read more)

20 Under 40: Dr. Ariane Conaboy

Photo: N/A, License: N/A, Created: 2016:11:16 09:38:07

As a doctor of internal medicine at Physicians Health Alliance, Dr. Ariane M. Conaboy, 34, realizes the importance of human life and how fragile it can be at times. Conaboy graduated from Scranton Prep and the University of Scranton with a double major in (read more)

Find us on Facebook!

Photo: N/A, License: N/A

"Like" us on Facebook for all of the latest news! (read more)

Follow us on Twitter!

Photo: N/A, License: N/A

Follow us for constant updates! (read more)

Article Tools

Font size
+
Share This
EmailFacebookTwitter

Photo: N/A, License: N/A

Photo: N/A, License: N/A

Volcker Rule muzzled — for now

Interim rule issued Jan. 14 offers reprieve

Washington’s rancorous debate about the power of government to regulate the financial services industry is now focused on legislation known as the Volcker Rule, a part of the mammoth Dodd-Frank legislation.

According to investopedia.com, the Volcker Rule “separates investment banking, private equity and proprietary trading (hedge fund) sections of financial institutions from their consumer lending arms. Banks are not allowed to simultaneously enter into an advisory and creditor role with clients, such as with private equity firms. The Volcker rule aims to minimize conflicts of interest between banks and their clients through separating the various types of business practices financial institutions engage in.”

Although many people applaud the spirit of the rule, the American Bankers Association estimates that it will take 6.6 million hours of work to implement the law and an additional 1.8 million hours per year for enforcement. Additionally, banks would have to hire more than 3,000 employees just to remain in compliance with the Volcker Rule. Another study found that the Volcker Rule could cost banks and investors $350 million. The result may be higher fees for consumers or a rise in the cost of trading stocks.

At press time, the American Bankers Association (ABA) and three community banks had pending litigation concerning the Volcker Rule. An interim final regulation federal regulators issued on Jan. 14 was designed to fix a problem with the Volcker Rule that would have caused hundreds of banks to take write-downs on certain assets. According to American Banker, although the rule “ostensibly helps just smaller institutions, it is worded in such a way that many large banks will also benefit. It was not immediately clear if regulators’ move would cause the ABA to drop the lawsuit.”

In a statement, the Independent Community Bankers of America (ICBA) said legislation introduced by subcommittee chair, U.S. Rep. Shelley Moore Capito (R-W.Va.) and committee chairman, U.S. Rep. Jeb Hensarling (R-Texas) was essential in “pressuring the federal banking regulators to release an interim final rule to rectify the Volcker Rule provision.”

“The final Volcker Rule, as issued on Dec. 10, would have a harsh and immediate impact on some 300 community banks that hold collateralized debt obligations (CDOs) backed by trust preferred securities (TruPS),” ICBA said . “The Dec. 10 rule would cause an irreversible impact on the earnings and capital of these banks. We know of several community banks that would literally be put out of business if this rule stands.”

Capito and Hensarling’s Fairness for Community Job Creators Act (H.R.3819) would allow banks to retain their holdings of TruPS CDOs issued before Dec. 10, 2013. Prior to Jan. 14’s interim final rule, the Volcker Rule would have required, in certain instances, that banks divest their holdings of these securities and write down these investments under “other than temporary impairment” accounting rules. For some banks, writing down these securities could result in a permanent loss of capital, an unanticipated requirement that was not included in the proposed Volcker Rule.

 

 

Escalating battle

 

 

Daniel Santaniello president and CEO of Fidelity Bank, explains that the Volcker rule will not, in all likelihood, impact community banks in northeastern Pennsylvania. Yet he confirms that the fight over Volcker is part of an escalating battle for increasing government regulation of the financial community.

To understand the Dood-Frank battlefield, Santaniello says it is necessary to review the events of 2008 when the American financial markets crashed. Many of the nation’s largest banks became distressed after extensive participation with questionable mortgage activities and sub-prime lending.

“When this house of cards fell, it brought on the Great Recession,” says Santaniello. “Washington vowed it would never happen again, and the Senate and House took action.”

Sections of the subsequent Dodd–Frank legislation require banks to qualify mortgages in a ore traditional manner than had become the norm during the housing bubble. Moreover, today borrowers must prove their ability to pay back the loan through income verification and other measures abandoned in the days leading up to the crash.

Another huge new change is The Consumer Financial Protection Bureau (CFPB), an independent federal super-agency that holds primary responsibility for regulating consumer protection as it relates to financial products and services. “Washington also added many enforcement attorneys, giving the enforcement end of the regulatory process real teeth,” says Santaniello. “This includes expansion at the levels of the FDIC and the Office of the Comptroller of the Currency.”

 

 

Pendulum swings

 

 

According to Santaniello, agreement is universal in the banking community that the regulatory pendulum has now swung much too far towards excessive control. This is causing many banks — including small community banks — to pay for the sins of the few, even though most community banks never took part in predatory lending.

In addition, a strict regulation process increases costs of operations, and bankers agree that regulatory legislation without balance doesn’t benefit the shareholders in the financial system. Trickle-down effects of regulation are also inhibiting bank process efficiency, particularly when a lack of continuity with regulations is the norm.

“Dodd Frank has had more than 400 changes since the bill was enacted,” says Santaniello, adding that the Volcker Rule will create unintended financial consequences. “More than 300 banks sit on trust preferred securities,’ says Santaniello. “If they are sold at a loss it will be painful.”

As he looks into the future, Santaniello expects Washington’s regulatory pendulum to continue its unpredictable swings. However, he doesn’t expect over-regulation to subside any time soon.

“The financial costs of dealing with massive amounts of regulations will be proportional to the size of the bank,” he says.

We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.