May 2012 - 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 largest banks have been undertaking a “good faith” approach to Volcker since the passage of Dodd-Frank.
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.