The Volcker Rule: How much faith is good faith?

May 2012


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.

Contact us

Dan Ryan
US Banking and Capital Markets Leader
Tel: +1 (646) 471 8488

David Sapin
Principal, Risk and Regulatory
Tel: +1 (202) 756 1737