Dec. 4 (UPI) -- Three Wall Street trade groups filed a lawsuit Wednesday against the Commodity Futures Trading Commission, a key regulator in Wall Street Reform. The groups allege that new rules for financial institutions are uncoordinated with other regulators, confusing and unfair.
The latest rules set forth regulate bank trading arms. The trade associations mostly argued against the regulator's guidance on cross-border swaps trading in a 60-page report to Washington district court. Swaps are a form of derivative traded, and derivatives were largely blamed for the 2008 financial crisis.
Trade groups say that the guidance, which affects how banks trade with foreign firms, was made without cost-benefit analysis. The lawsuit alleged that the guidance was therefore made unfairly to banks.
The groups claimed this could negatively affect investors as well as U.S. and foreign businesses.
This comes ahead of a vote on a key Dodd-Frank reform rule, the Volcker Rule, that regulators said would take place Dec. 10. The Volcker Rule is intended to separate bank proprietary trading and investment arms from consumer lending, and is under the authority of five different regulating bodies.
But even CFTC Chairman Gary Gensler recently said the rule is too weak to be efficient, and the U.S. Chamber of commerce has reported it has "many fundamental issues." The rule has since been toughened.
The CFTC has seen troubled days throughout the year, with one commissioner stepping down, another announcing he would step down and the chairman's term expiring in January.
Gensler has been known to be tough on banks, but has had to pressure Congress for more funding, espeically as the regulator strives to carry out the rules mandated by the Wall Street Reform and Consumer Protection Act of 2010, which is already far behind schedule.
[Wall Street Journal] [Bloomberg]