If the issues affecting the economy weren’t so serious, the regulatory implementation and concerns surrounding the Volcker Rule would almost have the same comic feel as Abbott & Costello’s famous baseball riff, “Who’s on First.”

In light of the upcoming hearing, let’s give a quick recap of where things stand.

The “Who” in this case involves the Federal Reserve, Securities and Exchange Commission, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, which each issued their portion of the proposed Volcker Rule regulations last October, with their comment period closing on February 13, 2012. The Commodities Future Trading Commission voted out a proposed Volcker Rule regulation last week with a 60 day comment period, but that hasn’t been published yet in the Federal Register.

With these competing comment periods it is almost impossible to thoughtfully decipher what’s on second – the “what” being the hundreds of pages of the proposal, which seeks answers to the more than 1,000 questions that have been posed. Why? Because each regulator deals with a different part of the markets and businesses have to look at each proposal to determine how they interact with each other. That is why the Chamber has written to the regulators asking that they reconcile and extend the comment periods to one fixed date to allow for informed answers and input needed by the regulators to move forward.

The same is true for the cost benefit analysis of the proposed rules. With five different regulators, there are five different legal standards and practices. One need look no further than the question of economic significance to understand why the Chamber has written to the regulators asking that they all abide with President Obama’s Executive Order tasking agencies with using increased economic analysis and choosing the least burdensome means of regulation. On economic significance, cost estimates are coming out of left field and right field - the OCC said the Volcker Rule will not cost the economy more than $100 million, while the SEC said they did not know if the costs will be more than that number.

Later today, Anthony Carfang, of Treasury Strategies will testify to Congress on the Chamber’s behalf outlining our concerns with the Volcker Rule. While everyone has fixated on the financial firms, it is the corporate treasurer that may pay the ultimate price in this game.

Corporate treasurers must use the debt and equity markets on a daily basis to ensure they have cash on hand to pay bills, to raise the capital needed to expand and create jobs, and to mitigate day-to-day financial risk surrounding business operations.  The proposed regulations implementing the Volcker Rule will likely cause disruptions to this system of capital formation.

The proposed regulations will increase operational costs, change long-standing business models of banks to act as “market-makers” and impose new administrative burdens, while possibly creating subjective regulatory oversight of thousands of trades by investors who are not engaged in proprietary trading.  This may cause main street businesses to pay higher costs to raise capital, force others to go overseas to use financing systems that are less onerous, or as may occur for mid-size and smaller companies—shut them out of certain debt and equity markets entirely.  These mid-size and smaller businesses may, at the same time, be barred from certain bank loans because of new lending requirements that are currently being negotiated under the Basel III capital requirements and prevented from using Money Markets if other regulations come through.

Additionally, regional banks and non-financial businesses that own banks or financing arms will have to build and maintain Volcker Rule compliance programs though they have not engaged in proprietary trading.

If this situation were to develop, businesses could have difficulty raising the capital needed for daily activities and long-term growth and job creation.

What it comes down to is this: when the treasurer places the call to raise cash, will anyone answer the phone?
   
With a firm July 21, 2012 legislative ban on proprietary trading, it is hard to see if these issues can be fixed or if this is a train wreck that ultimately harms non-financial companies from being able to raise money.

Which way will it turn out? Ask the third baseman – I don’t know.