x
Breaking News
0

U.S. banking regulator cautions against regulatory rollback

EconomyNov 14, 2017 02:10PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. File photo: Gruenberg testifies to the House Financial Services Committee about the effects of the Volcker Rule

By Pete Schroeder

WASHINGTON (Reuters) - The outgoing head of a key U.S. banking regulator is airing concern that banks and industry-sympathetic regulators may go too far in efforts to ease rules established after the 2007-2009 financial crisis.

Martin Gruenberg, chair of the Federal Deposit Insurance Corporation, made a broad defense of the post-crisis regulatory landscape on Tuesday, arguing the rules have made U.S. banks safer without sacrificing profitability.

"The danger is that changes to regulations could cross the line into substantial weakening of requirements," he said in prepared remarks to a forum on regulation and markets. "Let’s be clear: Our largest banking organizations are not voluntarily holding the enhanced capital and liquid asset cushions required by current rules."

Gruenberg cautioned that the U.S. economy is in its third-longest expansion in history, suggesting the country may be overdue for a potentially severe correction. And if financial markets or the broader economy took a hit, regulators should be sure banks are built to weather that stress.

Specifically, Gruenberg cautioned that efforts to return monetary policy to more normal conditions at central banks across the globe could pose problems as interest rates rise. And he noted that stocks, bonds and real estate are all "richly priced," suggesting a correction could be on the way.

"Taken together, these circumstances may represent a significant risk for financial market participants," he said. "While banks are now stronger and more resilient as a result of the post-crisis reforms, they are not invulnerable."

Gruenberg highlighted those looming risks to push back against the growing drive within the Trump administration and banks to loosen regulations in a bid to spur more economic activity.

Specifically, he aired concern about weakening capital requirements of the largest financial firms by removing certain investments from calculations for the Enhanced Supplementary Leverage Ratio, and lowering that ratio altogether.

Gruenberg did not rule out revisiting existing rules altogether. He said some rules, like the "Volcker Rule" ban on proprietary trading, could be made less onerous.

He is one of just a handful of appointees of President Barack Obama still steering financial regulators. His term as chair of the FDIC expires at the end of November.

However, his replacement has not yet been nominated and would have to be confirmed by the U.S. Senate, meaning Gruenberg has the option to staying on as FDIC chief for potentially months. He has not stated his plans for after his term expires.

U.S. banking regulator cautions against regulatory rollback
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email