At a glance
The Federal Reserve Board of Governors released a policy statement intending to clarify expectations for covered banking entities regarding the Volcker Rule. What constitutes “good faith” efforts toward compliance is unclear.
The Board of Governors of the Federal Reserve (BoG) released a formal policy statement intending to clarify expectations for covered banking entities at the July 21, 2012, statutory effective date of the Volcker Rule and in the two-year conformance period. The BoG stated that during the two-year conformance period, banking entities should engage in “good-faith” planning efforts to enable them to conform their activities and investments by no later than July 21, 2014.
"Good faith” preparations for the Volcker Rule can occur in stages:
Stage 1 - Now until the next version of the rule is issued—The institution-specific "blind faith" stage
Stage 2 - From the next rule until the end of the conformance period—The final rule "we have faith" stage
Stage 3 - Once full compliance with the rule is required—The business as usual stage
Most firms are developing “good faith” plans to bring a firm’s activities and investments into compliance with the Volcker Rule.