Fed’s Quarles outlines regulatory agenda for foreign banks

Excerpts from Speech by Vice Chairman for Supervision Randal Quarles at the Institute of International Bankers Annual Washington Conference, Washington, D.C.

The Federal Reserve is actively reviewing post-crisis financial reforms in an effort to better understand which reforms are working well and which ones can be improved to reduce regulatory burden and improve the efficiency, transparency, and simplicity of the regulatory framework without compromising a safe and sound financial system. In that effort, we recognize the importance of foreign banks to the US economy and have a strong interest in ensuring our regulations are appropriately tailored to their US footprint and risks to US financial stability. Our goal is to maintain a regulatory framework that helps to ensure a strong and stable banking system in an efficient manner that does not result in excessively burdensome costs to the banking industry or the economy as a whole.

In my estimation, post-crisis regulatory reforms have gone a long way toward meeting our goal of a more resilient financial system. That said, we are now at a point – with ten years of experience in setting up and living with the body of post-crisis regulation – where it is both relevant and timely to examine the post-crisis reforms and identify what is working well and what can be improved. If none of the regulatory measures implemented up to now were capable of improvement, this would be the first project of this scale and complexity conducted that had been done exactly right the first pass through.

I want to focus in my remarks today on two specific regulatory examples. These are, of course, not an exhaustive list of work to be done in the regulation of FBOs, but they tend to be near the top of the feedback list from both the industry and supervisors. First, I will discuss the application of enhanced prudential standards to FBOs, including our flexibility in implementing certain aspects of these standards. I will also offer some initial thoughts on opportunities for further tailoring that regime for FBOs. Second is the Volcker rule. I will provide some of my initial thinking on how we might be able to improve the Volcker rule, both generally and in its application to FBOs in particular.

Read the full speech


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