Silicon Valley calls the help desk on Volcker rule

Thu Jan 12, 2012 4:38pm EST
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By Dave Clarke

WASHINGTON (Reuters) - While Wall Street giants fight to get regulators to loosen the broad trading restrictions of the Volcker rule, a bank that sits in the heart of California's high-tech corridor has mounted its own aggressive and more focused lobbying effort.

Silicon Valley Bank is warning that the Volcker rule could hit the venture capital community it serves and deal a blow to startup companies critical to innovation and job creation.

"People can quibble about what's the right amount of capital flowing into startups but we would say let investors decide that, and policies shouldn't artificially get in the way," said Mary Dent, SVB's general counsel.

The bank, founded in 1983, focuses on the venture capital community and provides it with an array of services such as connecting firms with investors and serving as a commercial bank to startups and funds.

In a nod to the area's other high profile industry, SVB has a division that caters to winemakers.

The issue is whether regulators should interpret the Volcker rule to mean that a ban on banks investing their own money, beyond a small amount, in private equity funds should include investments in venture capital efforts.

The Santa Clara-based bank and groups like the National Venture Capital Association want regulators to explicitly exempt venture capital investing from the ban. They contend not doing so could deprive the industry of needed investments from banks at a time when funding is already hard to come by because of the sluggish economy.

The 2010 Dodd-Frank financial oversight law included the Volcker rule, which generally aims to restrict banks' risk-taking. Regulators are collecting comments on a proposed rule released in October.   Continued...