US could ease some post-crisis regulation: Fed governor

[WASHINGTON] The US Federal Reserve is open to easing some banking regulations put in place after the 2008 financial crisis, including stress tests and the so-called Volcker Rule, according to a central bank governor.

In testimony to be delivered Thursday, Federal Reserve Governor Jerome Powell said some reasonable reforms could be in order. But he argued reforms made since the crisis had left the US banking sector in better condition than it was before the meltdown.

The central bank should consider adjusting regulations "in common-sense ways that will simplify rules and reduce unnecessary regulatory burden without compromising safety and soundness," Mr Powell said in prepared remarks released Wednesday.

The testimony comes as the Trump administration prepares to modify much of the regulation included in the 2010 Dodd-Frank financial reform law, which was enacted in response to the crisis.

The Federal Reserve on Thursday is also due to publish the results of annual stress tests for major banks, which are called for under Dodd-Frank and intended to make sure lenders are on solid capital footing in the event of a crisis.

The financial industry, and mid-size banks in particular, have complained of the burden the new regulations place on lenders.

The Fed would support raising the threshold for the stress-test requirement, applying it to banks with US$50 billion or more in assets from the current US$10 billion.

The central bank could likewise exempt smaller banks from the Volcker Rule, which restricts certain speculative and risky trades made with a bank's own assets, according to Mr Powell.

"There is little doubt that the US financial system is stronger today than it was a decade ago," Mr Powell said in testimony to be delivered before the Senate Banking Committee.

"We must also be vigilant against new risks that may develop."

AFP