Congress approved the Volcker Rule to liberate the American taxpayer from the government-subsidized casino culture that overtook American banking and enriched speculators. This cornerstone of the Dodd-Frank Wall Street Reform and Consumer Protection Act is intended to return banking to the honest work of channeling savings into the real economy. The statute specifically prohibits banks from profiting on self-serving bets in price changes in financial instruments, so-called proprietary trading.

On Oct. 11, the Federal Deposit Insurance Corporation (FDIC) released a 298-page draft of the proposed rule, requesting comment through January 13, 2012.

Public Citizen believes the proposed rule draws too few bright lines to make clear what banks can and cannot do. For example, the Volcker Rule already permits legitimate market-making, allowing banks to earn fees by matching buyers and sellers of financial instruments. Rather than clearly separating permissible market-making and prohibited proprietary trading, the regulators are proposing that they will detect the difference between various trades by fishing through complex data provided by the banks after the fact. This is an invitation for evasion. Regulators also should prohibit market-making in financial instruments so complex as to elude regulatory understanding. Esoteric financial instruments with little market demand, the type at the core of the explosions of Bear Stearns, Lehman Brothers and other failed firms, must be prohibited at banks that enjoy taxpayer-backing.

The Volcker Rule invites regulators to reconsider core values of the American economy and the proper role of banks. Our Wall Street watchdogs should think first of Main Street and ensure that banks return to serving the real economy. Moody’s claims the Volcker Rule may reduce bank profits. The real measure of a strong Volcker Rule should be the vitality of Main Street.

Public Citizen urges regulators to remove the gratuitous exemptions for practices not specifically permitted in the Volcker Rule, and to draw clearer, more readily enforceable bright lines.

Public Citizen denounces today’s anti-consumer vote by Republican senators during the Senate Committee on Banking, Housing and Urban Affairs vote on the nomination of Richard Cordray to head the Consumer Financial Protection Bureau. These senators vowed to block any nominee on the Senate floor.

Congress created this keystone agency of the Dodd-Frank Wall Street Reform and Consumer Protection Act to combat “unfair, deceptive and abusive” banking practices. But large bank lobbyists and their supporters in Congress have fought the CFPB at every juncture, with bizarre congressional hearings questioning the zeal of chief architect Elizabeth Warren, attacks on its budget and now a refusal to permit the confirmation of its proposed agency head – for reasons having nothing to do with the nominee’ qualifications.

None of these senators raised objections to Cordray during his Sept. 6 nomination hearing. In fact, ranking member U.S. Sen. Richard Shelby (R-Ala.) called the qualifications of Cordray, a former Ohio attorney general, Marshall scholar at Oxford and clerk to U.S. Supreme Court Justice Anthony Kennedy, “good.” But Shelby has acknowledged that there’s another fight he’s waging, and blocking Cordray’s nomination will be his weapon. In the spring, Shelby organized 44 Republican senators to pledge they’d exploit Senate rules to block any nominee if President Barack Obama doesn’t eviscerate the powers of this critical new agency.

There are consequences to the Republicans’ reckless actions. The Republicans choose to make a political point at the expense of the low-income workers forced into exorbitant payday loans and other victims of predatory banking abuses that require a confirmed CFPB director to combat.