Treasury Secretary Nominee Clarifies Positions on Volcker Rule, Carried Interest

In written responses to the Senate Finance Committee, Treasury Secretary nominee Steven Mnuchin provided his views on a number of topics, including the carried interest on hedge funds and the Volcker Rule. Mr. Mnuchin stated that the administration’s tax plan would “recommend repealing carried interest on hedge funds.”

As to the Volcker Rule, Mr. Mnuchin suggested that the “proprietary trading” restrictions could be narrowed and the Volcker Rule applied only to FDIC-insured banks, not necessarily their affiliates. If confirmed as Chair of the Financial Stability Oversight Council, Mr. Mnuchin said he would “address the issue of the definition of the Volcker Rule to make sure that banks can provide the necessary liquidity for customer markets and address the issues” contained in a recent Fed working paper. Mr. Mnuchin stated that:

“I am supportive of the Volcker Rule to mitigate the impact that proprietary risk taking may have on a bank that benefits from federal deposit insurance. However, …we need to provide a proper definition of proprietary trading, such that we do not limit liquidity in needed markets….”

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