Comment Text:
Dear Regulators,
I am writing to you in deep pleading for a careful and disciplined approach toward the implementation of Dodd-Frank, specifically the Volcker Rule. Having been first an immigrant from Europe, and a staunch believer in the American system of free-market economic principles and ideals, I have been an investor in stocks and bonds for over 30 years. What is worrying at the moment to me is not only the potential for US banks to have difficulty in complying with the barrage of regulation (which in my mind is coming at a very troubling economic period in history), but its' impact on the ability of these banks to extend credit and loans. As a resident of the Central Valley of CA; a region that exemplifies the sub-prime debacle and is home to one of the worst foreclosure rates in the country, it is obvious to see the inability of my fellow residents to get the necessary loans to reinvest in the economy. The notion that credit is difficult to come by at the moment is an understatement. Although this may be a bit presumptuous, I feel the costly financial regulations imposed on the banks (namely Basel 3, dodd-frank compliance costs, sarbanes-oxley,etc.) is hurting them in their inability to extend credit when in fact it is needed most. Their recent headwinds that include the poor performance of their stock prices, and serious employment reductions, must surely have a carry-through impact on their ability to make loans to homeowners and new small businesses, particularly the difficult ones where I reside.
Secondly, I have concerned about the impact of the Volcker Rule on liquidity (particularly in the corporate bond market). With the difficulty in the stock market since 2008, I find the bond market to be most essential to provide steady income to the me and the many individuals that cannot handle the volatile swings in the stock market.) Certainly even the most staunch regulators must be aware of the adverse impact of the rule on liquidity, or they wouldn't exempted the US government bond market. I believe this serves as a very clear example that even if the Volcker Rule would limit the amount of prop trading, it is without debate that their would be an impact of liquidity of the markets. Thus, in my opinion, the rules should either affect all asset classes equally, (with no exemptions) or should not be put forth toward any of them.
It is only common sense that if liquidity declines further in the bond markets, that investors such as myself will command a higher interest rate in order to compensate. I think most would agree that this would not be welcome in the difficult economic times we're experiencing. I encourage regulators to make sure that the impending regulations do not harm the success and future of the best capital markets system in the world, the USA.
Thank you
