Goldman expects ‘recalibration’ on Volcker rule

The bank already has a five-year extension to comply with the regulation.

Goldman Sachs is expecting a ‘recalibration’ on the Volcker rule, according to its chief financial officer Martin Chavez.

Commenting on the regulation in the investment bank’s second quarter earnings call, Chavez said he thought there was an appetite for change among US regulators.

“Regulators are taking opportunities to step back and potentially recalibrate. When this recalibration occurs, we’d expect the regulations to continue to be thoughtful, to protect the system and at the same time, to support growth and a well-functioning market,” said Chavez. “I wouldn’t make a specific comment on how Volcker might evolve; multiple regulators have talked about this publicly.”

The bank revealed in May that it had secured a five-year extension on divestment obligations included in the Volcker rule, having previously been told to sell its private fund stakes by July 21 2017.

The Volcker Rule is part of the 2010 Dodd-Frank Act and forces banks to limit their investments in private funds to no more than three percent of Tier 1 capital. As of December 2016, banks which had funds in place before December 2013 could apply for an extension of up to five years.

A bill that includes a proposal to eliminate the Volcker Rule, the Financial Choice Act, is currently working its way through the US legislature, as reported by pfm.

The bank’s latest private equity fund, West Street Capital VII, has been in market since August 2016. It is the bank’s first buyout fund since the financial crisis. The firm held a first close on the fund in December on $4.5 billion. It has a target of $5 billion and a hard-cap of $8 billion.