Latest news with #bankregulation
Yahoo
6 days ago
- Business
- Yahoo
BofA, Morgan Stanley, U.S. Bank CFOs push for holistic capital framework review
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. At the Federal Reserve's capital framework conference Tuesday, Morgan Stanley CFO Sharon Yeshaya likened the current web of rules to a room with too many layers of paint to count. 'It feels like an old New York City apartment that they just keep painting over and over and over again. And you're sorta like, what color was this supposed to be?' she said. 'We should strip the paint and we should take a look and say, what are we trying to achieve?' One of the words mentioned repeatedly during the central bank's capital framework conference: holistic. As Trump-appointed agency heads pursue change to bank regulation, industry players also underscored the importance of finalizing a Basel III proposal. The July 2023 capital requirements proposal, intended to align the U.S. with Basel III, introduced overlaps with other requirements that weren't addressed in the initial proposed rule, Yeshaya said. Instead, considering the framework 'more holistically' is essential, she said. The Morgan Stanley CFO advocated for deciding how much capital needs to exist within the system, and then working through how banks allocate that capital appropriately to risks being run on a day-to-day basis. 'I don't think it's about gaming the system,' Yeshaya said. 'We're not trying to bring ourselves down.' 'We need to kind of get past the last 20 years and say that there isn't an intention to fail,' Yeshaya added, noting that banks endure reviews and challenges, and work to make changes after undergoing stress tests. The 'first-of-its-kind conference' Tuesday brought together industry players, academics, analysts, former regulators and other stakeholders to discuss the elements of the capital framework for large banks and where adjustments can be made, said Michelle Bowman, the Fed's vice chair for supervision, who orchestrated the event. The capital framework for U.S. lenders features risk-based capital requirements, leverage requirements, stress testing and the capital surcharge for the biggest, most complex banks. Currently, there are outstanding or in-development proposals on all four, and each was discussed Tuesday. Banks have advocated for less severe capital requirements because they say it affects lending, while supporters of more robust rules warn weaker regulations could tee up another financial crisis. As the all-day event wrapped up, Bowman told panelists 'we'll be calling on you, I know, as we're working on developing some of these ideas and thinking more deeply about some of the thoughts that you all have shared with us today.' With Trump-appointed heads in place at banking agencies and eager to make adjustments, Matthew Bisanz, a partner at law firm Mayer Brown, said he expects meaningful change to the capital framework. Tuesday's event 'changed my view that we will see a reproposal of Basel endgame later this year,' he said. 'I think that went from being a possibility to being the base case.' Bank regulators' 2023 proposal, which would have increased by 19% the amount of capital the largest banks would have had to hold, drew swift industry pushback. That Biden-era proposal was revamped last year, dropping the increase to 9%, although that reportedly faced criticism from both Democratic and Republican regulatory officials. The proposal was effectively shelved with the election of President Donald Trump. Big bank CFOs, in the conference's final panel Tuesday, weighed in on potential areas of capital framework reform, calling for transparency, efficiency and a comprehensive approach. Each of the individual capital rules is 'well intended' and designed for safety, Bank of America CFO Alastair Borthwick said Tuesday. If there were only one rule, then some conservatism would be expected. But the interrelation of the rules becomes 'important to us as practitioners, because we're managing all of them,' said the finance chief of the country's second-largest bank. In total, these rules tend to get 'more conservative, because they're greater than the sum of the individual rule.' As banks are faced with capital decisions, whether in stress tests or proposals such as Basel III, there are risk-weight considerations, said U.S. Bank CFO John Stern. When lenders allocate capital to business lines and have to make pricing decisions, 'it can really impact how we go to market, how it impacts clients, how it impacts our conversations with clients,' he said. 'That's really meaningful.' When it comes to regulators' to-do list, Bisanz noted that capital framework changes may have to take a back seat to stablecoin rules, since the GENIUS Act has rulemaking associated with it, which bank agencies must take action on. Recommended Reading OpenAI's Altman didn't expect banks to take to AI so soon Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
Fed's Bowman: Fed independence is very important with respect to monetary policy-CNBC
(Reuters) -Federal Reserve Vice Chair for Supervision Michelle Bowman on Tuesday said the central bank's ability to set monetary policy without political interference is "very important." "It's very important ... that we maintain our independence with respect to monetary policy," Bowman said in a CNBC interview ahead of a day-long conference she is hosting at the Fed on bank regulation. "But we also, as part of that independence, have an obligation for transparency and accountability as well. But we also have an obligation, in my view, as we have throughout my time on the board here since 2018, to listen to a broad range of voices to understand how others are viewing the economy and how that should influence our decisions in monetary policy making." The remarks from Bowman, appointed to the Fed Board of Governors by President Donald Trump in his first term and recently elevated by him to be the top banking regulator at the central bank, come as Trump has ramped up his criticism of the Fed and of its leader, Chair Jerome Powell, for not lowering interest rates as Trump wishes. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
22-07-2025
- Business
- Reuters
Fed's Bowman: Fed independence is very important with respect to monetary policy-CNBC
July 22 (Reuters) - Federal Reserve Vice Chair for Supervision Michelle Bowman on Tuesday said the central bank's ability to set monetary policy without political interference is "very important." "It's very important ... that we maintain our independence with respect to monetary policy," Bowman said in a CNBC interview ahead of a day-long conference she is hosting at the Fed on bank regulation. "But we also, as part of that independence, have an obligation for transparency and accountability as well. But we also have an obligation, in my view, as we have throughout my time on the board here since 2018, to listen to a broad range of voices to understand how others are viewing the economy and how that should influence our decisions in monetary policy making." The remarks from Bowman, appointed to the Fed Board of Governors by President Donald Trump in his first term and recently elevated by him to be the top banking regulator at the central bank, come as Trump has ramped up his criticism of the Fed and of its leader, Chair Jerome Powell, for not lowering interest rates as Trump wishes.
Bloomberg
11-07-2025
- Business
- Bloomberg
Crypto Renaissance Means It's Time to Protect Banks
With the price of digital assets testing the boundaries of plausibility, and Congress promising legislation to boost the industry further, now might be a good time for bank regulators to take notice. Why worry about banks? It wasn't so long ago — less than three years — that banks catering to the cryptocurrency industry failed after prices tumbled and a raft of companies went bankrupt. Regulators had to take emergency steps to prevent a wider loss of confidence and promised reforms to make the industry more resilient. That hasn't happened. Instead — under pressure from the White House, the industry and lawmakers — regulators have rescinded guidance that sought to limit banks' involvement in crypto or blockchain companies. A rally in digital tokens and related businesses has restored the financial industry's fear of missing out. Meanwhile, crypto-connected companies are applying for their own bank charters. Before the traditional banking system gets further intertwined with the blockchain-based economy, regulators should make some prudent adjustments. That means heeding two lessons of the 2023 meltdown. The first is that banks are at risk when they have a lot of deposits from a single industry. Silvergate Capital Corp. relied on crypto companies for 98% of its deposits, only to learn how quickly they could evaporate in a downturn. It ended up liquidating its assets. Silicon Valley Bank's emphasis on tech startups and venture capitalists ended with a run on the bank. Circle Internet Group Inc., which issues the USDC stablecoin, held $3.3 billion of its cash reserve at SVB, making it the largest uninsured depositor bailed out when regulators stepped in. Such risks are almost certain to reemerge. Stablecoins are expected to grow to $2 trillion in value, up from about $260 billion today. Congress may soon require their issuers to park reserves in safe, liquid assets, which will almost inevitably mean some of their accounts will exceed the $250,000 insured limit. And one reason crypto companies are seeking bank charters is to create venues to bypass the sluggish interbank payments system. Regulators should remember that this was also the rationale behind Silvergate's in-house electronic-exchange platform, which attracted so much deposit funding from blockchain-connected entities that the bank failed spectacularly when their finances soured. To address this funding risk, banks should be required to post enough high-quality collateral (that is, not memecoins) at the Federal Reserve's discount window to cover the withdrawal of all uninsured deposits. That would eliminate the chance of runs caused by a sudden exodus from stablecoins or a downturn in crypto prices — or the collapse of some other hot industry to which they're exposed. Another lesson from 2023 is that risk management and anti-money-laundering controls can be overwhelmed — or disregarded — when banks grow quickly. Silvergate's customers included the high-flying exchange FTX, whose founder was later imprisoned for fraud. The company's anti-money-laundering systems were also deficient; transactions over its exchange weren't monitored for at least 15 months in 2021 and 2022. Short sellers punished the bank even before regulators did. In addition to strictly monitoring such risks, finally, supervisors should try to make the rules easier to comply with. That means, for example, helping the banks test new technology to detect money laundering and reducing the burden of suspicious-activity reports for customers and activities that aren't high risk. Raising the decades-old threshold at which banks must report transactions to the Treasury Department should reduce busywork without unduly hindering law enforcement. Clearly, Congress and the White House both want to see crypto companies thrive. Banks, too, are eager to resume doing business with them. But when it comes to the risks posed by this chaotic industry, no one should assume that this time is different. More From Bloomberg Opinion:
Bloomberg
26-06-2025
- Business
- Bloomberg
Mexico Regulator Steps In to Run Banks Tarred by US Accusations
Mexico's bank regulator said it was temporarily stepping in to run CIBanco SA and Intercam Banco SA in a bid to protect customers following accusations by US authorities that the firms were potentially facilitating money laundering by drug cartels. The National Banking and Securities Commission, or CNBV, said in a statement Thursday that it was replacing management at the two banks 'in order to safeguard the rights of these institutions' savers and clients, given the potential implications for these banks of the measures announced by the United States Department of the Treasury.'
