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- Senators and financial regulators met Thursday in an oversight hearing to “strike the right balance in the rule writing process” for financial institutions, according to Sen. Tim Johnson, chairman of the Senate Banking, Housing and Urban Affairs Committee.
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- Recent regulations include stricter capital requirements for banks and bank holding companies that will “[strengthen] the quality and quantity of capital that banks are required to own,” said Mary Miller, undersecretary of the Treasury.
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- “Living wills and stress tests are the new rules of the road for bank holding companies, providing the companies, regulators, the marketplace, and the public with valuable information they previously lacked,” Miller said, advocating constant communication and reporting of information from financial institutions.
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- Tarullo encouraged more attention to bank liabilities rather than assets, which he says hasn’t been done enough in the past. “One way or another we’ve got to take account of business models and funding models which create more risk in the firms and the system.”
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- Federal agencies will “help institutions prepare for [regulatory] implementation” “Although the new requirements are higher and more stringent than the old requirements, the vast majority of banks meet the requirements of the interim final rule,” Gruenberg said, adding that requirements “The rule would have the effect of preserving and maintaining the gains in capital strength the industry has achieved in recent years.”
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- “While these are positive developments, there remains much to do, and we are continuing to stress that institutions must stay vigilant about monitoring new and existing risk,” Curry said.
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- “How much leverage do you have?” Warren asked Tarullo. She pressured regulators to impose stiffer penalties when enforcing reform measures. She called for penalties in line with the admission of guilt required by the Securities and Exchange Commission. “Then the public can decide for themselves whether or not you’re fighting for their behalf.”
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- There will be “$5billion to $6 billion sucked out of the economy as financial entities set aside money to meet requirements,” said Tester, encouraging regulators to work quickly with banks in handling regulatory changes.
The U.S. Senate Committee on Banking, Housing and Urban Affairs met Thursday to discuss ways to mitigate systemic risk in the financial sector.