Latest news with #bankingregulation
Wall Street Journal
2 days ago
- Business
- Wall Street Journal
At the Fed's Banking Conference, Sam Altman, Capital Rules and Avoiding the Powell Drama
The Federal Reserve wants to do things differently this time around. At least when it comes to banking regulation. After a package of strict requirements, known as Basel III endgame, fizzled last year, the Fed on Tuesday convened some of the nation's top bankers to discuss a new way forward.
Yahoo
3 days ago
- Business
- Yahoo
Bessent calls for deeper US bank regulatory reforms, scrapping dual capital requirements
By David Lawder and Andrea Shalal WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent on Monday called for deeper reforms of what he called an antiquated financial regulatory system and said regulators should consider scrapping a "flawed," Biden-era proposal for a dual capital requirement structure for banks. Speaking at the start of a Federal Reserve regulatory conference, Bessent said excessive capitalization requirements were imposing unnecessary burdens on financial institutions, reducing lending, hurting growth and distorting markets by driving lending to the non-bank sector. "We need deeper reforms rooted in a long-term blueprint for innovation, financial stability, and resilient growth," Bessent said in prepared remarks. The Trump administration is pursuing a broad reform agenda aimed at cutting rules governing financial institutions, including capital requirements, arguing that such actions will boost economic growth and unleash innovation. Bessent said regulators have for too long pursued a "reactionary approach" that has weakened competitiveness and led to byzantine regulations. The Treasury chief, who earlier on Monday called on the Fed to review its operations to safeguard its monetary policy independence, said the Treasury would take a stronger role in driving reform efforts by regulators, including the Fed. "To that end, the department will break through policy inertia, settle turf battles, drive consensus, and motivate action to ensure no single regulator holds up reform," Bessent said of the Treasury. REDUCING CAPITAL REQUIREMENTS Banking regulators should consider abandoning the dual structure proposed in July 2023, but never enacted, that would have seen banks comply with the higher of two different methods of measuring their risk capital requirements. The proposal, which came after the high-profile failure of Silicon Valley Bank and other institutions in 2023, would have significantly increased the amount of capital banks needed to set aside for potential losses. It drew intense opposition from the industry. "This dual-requirement structure did not derive from a principled calibration methodology. It was motivated simply to reverse-engineer higher and higher capital aggregates," Bessent said. "It also was at odds with capital reform as a modernization project because it would have preserved the antiquated capital requirements as the binding floor for many, perhaps most, large banks." Bessent also called for regulatory capital relief not just for large banks but also at the smaller, community bank level. One solution, he said, would be to allow any bank not subject to modernized capital requirements a choice to opt in. "This would result in a meaningful reduction in capital for those banks," Bessent added. While he said Treasury would prioritize financial regulatory policy that puts American workers first and prioritizes growth, he said regulators needed to carry out statutory mandates for financial safety and stability and consumer protection. "Rationalizing and tailoring regulation does not have to amount to regulatory weakening," Bessent said.
Yahoo
3 days ago
- Business
- Yahoo
Bessent calls for deeper US bank regulatory reforms, scrapping dual capital requirements
By David Lawder and Andrea Shalal WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent on Monday called for deeper reforms of what he called an antiquated financial regulatory system and said regulators should consider scrapping a "flawed," Biden-era proposal for a dual capital requirement structure for banks. Speaking at the start of a Federal Reserve regulatory conference, Bessent said excessive capitalization requirements were imposing unnecessary burdens on financial institutions, reducing lending, hurting growth and distorting markets by driving lending to the non-bank sector. "We need deeper reforms rooted in a long-term blueprint for innovation, financial stability, and resilient growth," Bessent said in prepared remarks. The Trump administration is pursuing a broad reform agenda aimed at cutting rules governing financial institutions, including capital requirements, arguing that such actions will boost economic growth and unleash innovation. Bessent said regulators have for too long pursued a "reactionary approach" that has weakened competitiveness and led to byzantine regulations. The Treasury chief, who earlier on Monday called on the Fed to review its operations to safeguard its monetary policy independence, said the Treasury would take a stronger role in driving reform efforts by regulators, including the Fed. "To that end, the department will break through policy inertia, settle turf battles, drive consensus, and motivate action to ensure no single regulator holds up reform," Bessent said of the Treasury. REDUCING CAPITAL REQUIREMENTS Banking regulators should consider abandoning the dual structure proposed in July 2023, but never enacted, that would have seen banks comply with the higher of two different methods of measuring their risk capital requirements. The proposal, which came after the high-profile failure of Silicon Valley Bank and other institutions in 2023, would have significantly increased the amount of capital banks needed to set aside for potential losses. It drew intense opposition from the industry. "This dual-requirement structure did not derive from a principled calibration methodology. It was motivated simply to reverse-engineer higher and higher capital aggregates," Bessent said. "It also was at odds with capital reform as a modernization project because it would have preserved the antiquated capital requirements as the binding floor for many, perhaps most, large banks." Bessent also called for regulatory capital relief not just for large banks but also at the smaller, community bank level. One solution, he said, would be to allow any bank not subject to modernized capital requirements a choice to opt in. "This would result in a meaningful reduction in capital for those banks," Bessent added. While he said Treasury would prioritize financial regulatory policy that puts American workers first and prioritizes growth, he said regulators needed to carry out statutory mandates for financial safety and stability and consumer protection. "Rationalizing and tailoring regulation does not have to amount to regulatory weakening," Bessent said.
Times
15-07-2025
- Business
- Times
Rachel Reeves urged not to weaken UK's post-crisis bank regulations
The architect of the ring-fencing rules for banks has warned ministers that it would be a 'bad idea' to fundamentally weaken the regime after the chancellor set out plans to loosen what was the centrepiece of Britain's post-crisis financial regulation. Rachel Reeves pledged on Tuesday to make 'meaningful reforms' to ring fencing, which was brought in after the 2008 banking meltdown and forced lenders to legally separate their high street businesses from riskier investment banking divisions. It follows fierce criticism of the regime in recent months from the bosses of some of Britain's biggest banks, who wrote to the chancellor in April calling on her to abolish the rules altogether, arguing that they were inefficient and had been superseded by other reforms. • Rachel Reeves to relax bank ring-fencing rule to boost growth While the Treasury said it was 'committed to upholding' ring fencing, it revealed it would review the rules to examine 'how changes can strike the right balance between growth and stability'. This prompted Sir John Vickers, who led the government-backed commission that originally proposed ring fencing in 2011, to caution Reeves against going too far with any changes. 'There may well be scope to improve ring fencing's implementation but any weakening of the basic architecture would be a policy mistake and a bad idea,' he told The Times. 'It would remove an important element of safety and soundness regulation of UK banking, and not help the policy objective of more investment and growth in the UK economy.' The Treasury said that areas its review would examine included allowing ring-fenced divisions to offer more services to UK businesses and greater flexibility to share back-office resources across a bank's ring fence. It was one of a flurry of regulatory changes unveiled by Reeves on a visit to Leeds, which the chancellor said would 'put the UK ahead in the global race for financial businesses'. The overhaul was announced just hours before Reeves made a highly anticipated speech to City grandees at Mansion House, in which she called her revamp the most wide-ranging regulatory reform package for financial services in more than a decade. The reforms include: • An overhaul of the Financial Conduct Authority's sweeping consumer duty rules, which were only introduced in July 2023, to tackle worries about how the regime affects the way businesses interact with each other.• Streamlining the senior managers regime, which is a set of post-crisis regulations aimed at ensuring finance executives are held accountable for their actions.• The creation of a new 'concierge service' to help overseas financial firms enter the UK, and the establishment of a listings taskforce to attract companies to the London stock market. • Reform of the Financial Ombudsman Service, which resolves consumer disputes with firms, to address industry concerns that it has become an unpredictable 'quasi-regulator'. • Rule changes by the Bank of England to reduce capital requirements on lenders, including a plan to cut red tape on small and mid-sized banks to boost their ability to compete in the mortgage market. The chancellor's overhaul package, dubbed the 'Leeds reforms', seeks to 'rewire' Britain's financial system. It comes as pressure mounts on Reeves to show that the government can turbocharge the UK's faltering economy. The Treasury said its aim was to double the growth rate in UK net exports of financial services by 2035 and to 'tear down the barriers to attracting investment in the finance sector'.
Bloomberg
02-07-2025
- Business
- Bloomberg
Deutsche Bank Says Basel Capital Rules to Crimp Defense Finance
Deutsche Bank AG 's top risk manager has warned Europe against crippling lenders with so many rules that its legacy will be 'unfortunately, they didn't have tanks, but the banking regulation was really fair.' Marcus Chromik, Deutsche Bank's new chief risk officer, told a Frankfurt banking conference that the European implementation of new global capital rules would frustrate banks' support for longer-term projects critical to defense.
