WASHINGTON (Reuters) – Big banks keen to see bottom-line benefits from U.S. President Donald Trump’s pledge to cut red tape are pinning their hopes primarily on Randal Quarles, the new head of bank supervision at the Federal Reserve.
With the Republican-controlled Congress’s attempts to roll back laws introduced in the wake of the 2007-2009 financial crisis largely stalled, banks are looking to regulators, particularly the U.S. central bank, to loosen the reins through rule tweaks and more lenient supervision.
Quarles - Wall - Street - Lawyer - Equity
Quarles, a former Wall Street lawyer and private equity investor nominated to the Fed by Trump last summer and sworn in this month, will have the most influence in such efforts due to the central bank’s extensive financial oversight powers.
“Normally, when you get a new governor at the Fed, you don’t see anything for a few months,” said Wayne Abernathy, executive vice president at the American Bankers Association and a former colleague of Quarles at the Treasury Department under President George W. Bush.
Expectations - Quarles - Fanfare - Position - Kind
“I think the expectations for Quarles are higher, because there was so much fanfare about the position. He’s going to feel some kind of pressure to show something.”
The Fed declined to comment.
Quarles - Board - Banks - Analysts - Fed
With Quarles on board, banks and analysts expect the Fed to ease aspects of everyday examination and supervision, in particular reducing the number of post-inspection notices demanding fixes to technical compliance issues, ranging from sales practices to outsourcing contracts.
These ‘Matters Requiring Attention’ notices were originally conceived to raise specific concerns but are increasingly being used by watchdogs to police hundreds of activities, bogging down boards and senior managers in paperwork.
Treasury - Areas - Fed - Power - Liquidity
The Treasury has also identified several areas where the Fed has unilateral power to ease the liquidity and capital requirements on foreign banks operating in the United States, in some cases by simply deferring to their home rules.
The Fed’s annual stress...
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