WASHINGTON (AP) — The Federal Reserve on Monday put forward two proposals to modify regulations put in place after the 2008 financial crisis that the banking industry complained were too restrictive.
The proposed regulatory changes were approved on a 4-1 vote with Fed board member Lael Brainard opposing the changes. She said they “would weaken important safeguards” put in place after the crisis.
The measures will not go into effect until after a public comment period ends this summer and could be modified based on those comments. One proposal deals with liquidity, the amount of funds a bank must maintain that would be readily available in times of crisis.
The other would loosen the frequency that some foreign and domestic banks would be required to submit “living wills,” the documents that show how a failed bank would wind down operations.
The proposed changes are being put forward to update regulations following congressional passage of a measure to loosen some of the requirements imposed by the 2010 Dodd-Frank Act which had been passed in response to the financial crisis.
During the 2016 presidential campaign, Donald Trump had attacked the 2010 law, arguing that it was a disaster because it was depressing the number of loans banks could make and thus slowing economic growth.
Randal Quarles, Trump’s choice for the job of Fed vice chairman for bank supervision, said that the proposals put out for public comment on Monday regarding foreign banks were in line with proposals the Fed put forward last fall dealing with domestic banks.
“The proposals seek to increase the efficiency of the firms without compromising the strong resiliency of the financial sector,” Quarles said Monday.
But Brainard argued that the proposals would increase risks for the financial system and were not needed.
“I see no change in the financial environment that would require us to weaken protections that are vital to a safe and sound financial system and ensure large banks — and not taxpayers — are on the hook” during a financial crisis, Brainard said.
Copyright © 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, written or redistributed.