On Monday evening, around one hundred people gathered in Liberty Square in downtown Manhattan, preparing to march to the Federal Reserve and Securities and Exchange Commission buildings nearby. Protesters carried signs reading, “We don’t make demands so this is a suggestion: Enforce the Volcker Rule.”

Occupy the SEC, a working group of Occupy Wall Street that includes former financial industry professionals, lawyers and concerned citizens, had been up until 5am the night before, editing and formatting a letter they had prepared as a public comment to the SEC. For months, OSEC met twice weekly to review the 298-page proposed Volcker Rule, conducting a diligent, line-by-line analysis of the document. Proposed as part of the Dodd-Frank Act, the Volcker Rule essentially aims to ban proprietary trading and ownership of hedge funds by banks. Between now and July, the regulating bodies involved—the SEC, the FDIC, the OCC, the CFTC and the Fed—are required to read public comment letters and issue final details on the Volcker Rule.

When members of OSEC viewed their letter on Monday on the SEC’s website, they were elated to see that at 325 pages, it was the longest letter by far. In comparison, the longest letter by the Securities Industry and Financial Markets Association (SIFMA), a group that represents the interests of securities groups, banks and asset managers, was 173 pages—although SIFMA submitted five letters in total.

“When the banks read the Rule, they say, it’s too harsh, too much regulation,” Alexis Goldstein explained at an Occupy Wall Street teach-in she gave last fall, when OSEC was first forming. OSEC’s goal was to present the SEC with a strong alternative to the banks’ comments.

OSEC’s letter outlines a number of “loopholes” written into the Volcker Rule and urges the regulating bodies to eliminate them.

“During the legislative process, the Volcker Rule was woefully enfeebled by the addition of numerous loopholes and exceptions. The banking lobby exerted inordinate influence on Congress and succeeded in diluting the statute, despite the catastrophic failures that bank policies have produced and continue to produce,” reads the introduction to OSEC’s letter. The document goes on to detail how various portions of the proposed Volcker Rule essentially negate the Rule’s purpose by permitting the very behavior it was designed to prevent. 

The main loophole that OSEC’s letter points toward is an exemption for repurchase (“repo”) agreements, which allow for illiquid assets, such as bonds or securities, to be converted into short-term liquidity. The letter argues that the Congressional Record shows no support for the blanket exemption for repo trading currently written into the draft and stresses that “repos could be used in a variety of ways to evade the rules and serve as a conduit for proprietary trades.”

The letters by OSEC and SIFMA could hardly be more different. Whereas OSEC has declared that the proposed Rule draft isn’t strict enough on proprietary trading, SIFMA’s letter argues that the rule, if passed as written, will impose too many limits on proprietary trading that will “limit market making activity,” as they say in the press release about their public comments.

“The proposed regulations are unworkable, not faithful to Congressional intent, and will have negative consequences for U.S. financial markets and the economy,” said Tim Ryan, president and CEO of SIFMA. Before heading SIFMA, Tim Ryan held a senior position at J.P. Morgan as the Vice Chairman of Financial Institutions and Governments.

SIFMA’s statement continues: “Investors will face decreased market liquidity and higher costs. Companies will find it more expensive to raise capital, making it more costly to invest in plant and equipment and create jobs. In our comments, we have offered suggestions to better implement the Volcker Rule, all in compliance with Congressional intent but without damaging the liquidity and resiliency of U.S. capital markets.”

The OSEC speakers at Monday night’s rally addressed this point, cautioning that “market making” is a euphemism for proprietary trading. Standing on the street below the Federal Reserve Building in Manhattan’s Financial District, the Occupiers crowded around Alexis Goldstein, one of the founding members of OSEC and a former IT and business analyst for Wall Street banks. Goldstein told the group, through the human microphone, “this is a message to the Fed, to the SEC, to protect the public! The Volcker Rule is supposed to protect the public from the banks. We need a strong Volcker Rule. No proprietary trading, no hedge funds owned by banks!”

The crowd cheered enthusiastically and marched to the SEC office at Three World Financial Center. Along the way, workers in the financial industry who were just leaving their offices raised eyebrows at the protesters; one exclaimed, “It’s Occupy Wall Street! They’re back!” At the SEC building, an Occupier named Aaron Bornstein, a neuroscience PhD student who lives in Brooklyn, gestured toward the edifice and said, “The SEC is right across the street from Goldman Sachs, and they see each other every day,” he told the protesters. “They eat lunch together, they go to the gym together. It’s easier to protect people you know than people you’ve never met—like us,” said Bornstein.