Legislative Intent and History Behind Section 619
Section 619(b) declares that no later than six months after the enactment of this section, the Financial Stability Oversight Council (“FSOC”) shall study and make recommendations on implementing the provisions of this section. Accordingly, on January 18, 2011, the FSOC released the results of its study – which focused heavily on the proprietary trading prong of the Volcker Rule, and less on the fund investment prohibition to which the de minimis exception applies. Among the recommendations made regarding the fund prohibition section were the prohibition of any banking entity “bailing out” an ailing hedge/private equity fund, the need to identify similar funds (other than hedge or private equity) that might fall within the rule’s scope, and the requirement that banks publicly disclose any allowable fund investments under the rule. The FSOC study is primarily concerned with ensuring that this exception does not allow banking entities to expose themselves to excessive risk by finding loopholes in the exception – such as investing in a type of fund that doesn’t currently fall under the rule’s prohibitory scope. Id. Whether or not those objectives are met remains to be seen in the regulatory rules that are written pursuant to the results of this study as mandated in section 619(b).