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BCN-09
US-BANKING-REGULATION-ECONOMY
US Democrat vows to halt easing of banking regulations
WASHINGTON, Nov 15, 2018 (BSS/AFP) – A senior Democrat lawmaker on
Wednesday vowed to halt the easing of post-crisis financial regulations once
her party takes power in the US House of Representatives in January.
California Representative Maxine Waters is expected to lead the House
Financial Services Committee once the next Congress begins, and her remarks
signaled what could be a substantial shift in oversight.
“Make no mistake, come January … the days of this committee weakening
regulations and putting our economy once again at risk of another financial
crisis will come to an end,” Waters said.
An already fragile Wall Street took the news badly, with major indices
closing lower, driven in part by falling share prices for major financial
players, including Goldman Sachs and JP Morgan Chase.
Waters spoke ahead of twice-yearly testimony by Federal Reserve Board
Governor Randal Quarles, the central bank’s vice chairman for banking
supervision.
In May, lawmakers, including many Democrats, approved a rollback of
certain provisions in the 2010 Dodd-Frank Wall Street reform legislation,
freeing thousands of small banks from the heightened federal oversight
intended to prevent a repeat of the 2008 financial meltdown.
Advocates said such regulations, including stress testing, were too
onerous for smaller banks with assets below $250 billion and the changes
would help spur the economy.
Since last year, federal regulators, including the Fed, have also removed
“too big to fail” designations from the insurance giants AIG and Prudential
Financial, meaning they too face less stringent requirements.
Waters also said the Fed must keep a “watchful eye” on financial
institutions and “make strong use” of existing powers to punish legal
violations.
Quarles said in his testimony that the Fed was “very much aware of the
dangers of complacency” but that the banking system as a whole continued to
be well capitalized and continued to make improvements in how it managed
risks.
The changes represented a “step forward in regulatory efficiency,” he
said, creating a “nuanced framework where riskier activities and a larger
systemic footprint correspond to higher supervisory and regulatory
requirements.”
“I wouldn’t view that in any way as weakening regulation,” Quarles said in
answering lawmakers’ questions.
“I think that’s an appropriate alignment of regulation.”
BSS/AFP/HR/0938