U.S. bank group threatens lawsuit over Volcker rule

The American bankers Association on Monday said it would mount a legal challenge to the "Volcker rule" unless U.S. banking regulators softened a provision of the rule that restricts bank ownership of certain investments. "If the rule is not suspended, we will shortly file a lawsuit challenging the rule ... and seeking emergency relief," wrote Frank Keating, the chief executive of the ABA, wrote in a letter to regulators. At issue is a provision of the rule that prohibits banks from owning more than 3 percent of any individual hedge fund or private equity fund, and bars banks from investing more than 3 percent of their total equity capital in private funds. The ABA's letter, sent to the heads of the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp, is the latest back-and-forth public statement by the trade group and regulators.

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