US Bank Regulators: The Federal Reserve’s top watchdog for Wall Street, Michael Barr, along with other bank regulators, aimed to ease concerns of skeptical U.S. lawmakers on Tuesday, assuring them that their plans to increase U.S. bank capital requirements would not hinder lending or harm small businesses.
Members of the U.S. Senate Banking Committee, spanning both parties, pressed Barr, the Federal Deposit Insurance Corporation’s Martin Gruenberg, and acting Comptroller of the Currency Mike Hsu on their “Basel III Endgame” proposal, which seeks to overhaul how banks assess risk and, consequently, determine the amount of capital they must hold against potential losses.
The regulators contended that bolstering cash cushions would enable firms to weather unexpected losses. They reiterated their openness to feedback on the proposal and expressed a willingness to make adjustments.
“We recognize the rule may not appropriately capture all risks. We welcome all comments on all aspects of the rule, and we will take these comments seriously to improve the rule,” stated Barr during the two-hour hearing.
Banks are vehemently pushing to soften the proposal, asserting that it could drain credit from the economy. As part of their efforts, banks have lobbied lawmakers to urge regulators to reconsider the rule. On Monday, 39 Senate Republicans increased the pressure, urging the regulators to discard the proposal.
In a further indication that the campaign is gaining momentum, numerous moderate Democrats joined Republicans on Tuesday in voicing concerns about aspects of the rule, including its potential impact on making mortgages more expensive for low-income Americans.
“If this rule doesnt work, its going to raise hell with the economy,” remarked Democratic Senator Jon Tester.
Barr reiterated that the proposal, as currently written, would only apply to a handful of the nation’s largest banks, with a primary focus on stricter requirements for activities like trading rather than traditional lending.
Some Democrats urged the agencies to stand firm against industry criticism and finalize the rules, which were initially conceived following the 2007-2009 global financial crisis.
“These capital rules represent the final and long, long overdue plank in the post-financial crisis overhaul,” noted Senator Sherrod Brown, the committee chair. “I hope youll see these arguments for what they really are, the same old Wall Street whining.”
In a separate line of questioning, the FDIC’s Gruenberg faced persistent queries from lawmakers concerning a Wall Street Journal report indicating that female employees had left the regulator due to its “toxic” culture, and that instances of sexual harassment were not being addressed.
Gruenberg, who has been at the agency since 2005, assured lawmakers that he was distressed by the report and pledged to take corrective action.
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Our Reader’s Queries
Who are the 4 main regulators of finance sector?
In the United States, the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), and the FDIC are the main regulatory agencies that oversee the internal operations of commercial banks and enforce state and federal banking laws. These agencies play a crucial role in maintaining the stability and integrity of the banking system.
What are the 3 main regulatory agencies?
The United States has several regulatory agencies that oversee various industries. Among the most prominent are the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), and the Consumer Product Safety Commission (CPSC). These agencies are responsible for ensuring the safety and efficacy of food, drugs, and consumer products, respectively. By enforcing regulations and conducting inspections, they help protect the public from harm and promote a healthy and sustainable environment.
What regulates the U.S. banking system?
The Federal Reserve oversees the compliance and safety of specific financial institutions through monitoring, inspection, and examination. Their responsibility is to ensure that these institutions operate within the guidelines of rules and regulations while maintaining a secure and stable environment.
Who are the primary regulators of banks?
The OCC holds the topmost authority over banks that are chartered under the National Bank Act (12 USC 1 et seq.) and federal savings associations that are chartered under the Home Owners’ Loan Act of 1933 (12 USC 1461 et seq.).