Appearing today on the New York Times website, SIFMA President & CEO Tim Ryan responded to the February 27 editorial “Not What Paul Volcker Had in Mind.”

To the Editor:

Your Feb. 28 editorial “Not What Paul Volcker Had in Mind” raises concerns about industry comments about the Volcker rule, a provision of the Dodd-Frank financial reform law, but disregards the damaging effects this rule could have on markets.

The current proposal, in carrying out the Dodd-Frank law, is based on a presumption that any possible risk-taking activity conducted by a financial institution in service to clients is prohibited proprietary trading until the institution can prove otherwise. We believe that is backward reasoning.

When banks provide consistent and ample liquidity (the ability to buy or sell a security at a reasonable price in a timely fashion), they strengthen financial markets and benefit investors and issuers who rely on capital and credit. Without capital and credit, businesses can’t grow and create jobs.

As currently drafted, the Volcker proposal would constrain liquidity because banks would not enter into market-making activities for fear of their being presumptively deemed proprietary trading and thus not allowed.

While highlighting perceived benefits of the Volcker rule, the editorial did not fully outline the negative impact.

TIM RYAN
President and Chief Executive
Securities Industry and Financial Markets Association
Washington, Feb. 29, 2012
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