By Jeff Bater
A top banking regulator whose term ends this month called for “continued vigilance” and warned against weakening post-crisis capital and liquidity safeguards for big banks.
Martin Gruenberg, who heads the Federal Deposit Insurance Corporation, expressed concern about the idea of removing central bank exposures, Treasury securities, and initial margin from the calculation of the Enhanced Supplementary Leverage Ratio and lowering the ratio.Such changes could cut the leverage capital requirements for the eight U.S. global systemically important banks by amounts ranging from 25 percent to more than 50 percent for some institutions, he said in remarks Nov. 14 at the Brookings Institution in Washington.
“Weakening the core reforms that apply to our largest banking organizations would increase the risk of future banking crises that would be very costly for the U.S. financial system and economy,” Gruenberg said.
Gruenberg said post-crisis changes could benefit from review, but expressed concern that changes to regulations could cross the line into substantial softening of requirements.
“Let’s be clear: Our largest banking organizations are not voluntarily holding the enhanced capital and liquid asset cushions required by current rules,” the FDIC chairman said. “Some have made quite clear that, left to their own devices, they would operate with less capital and less liquidity.”
Gruenberg has served on the FDIC’s board of directors since 2005 and began a five-year term as chairman in 2012. His term as chairman expires Nov. 29, but the Trump administration hasn’t yet nominated a replacement.
“Much has changed in banking and bank regulation since I started at the FDIC,” he said. “Yet, I confess to having a certain sense of déjà vu.”
Gruenberg said banking industry conditions are strong and the possibility of a serious downturn anytime soon is generally viewed as remote.
“That was certainly true during the pre-crisis years as well,” he added. “If I have one key point to make today, it is that we should guard against the temptation to become complacent about the risks facing the financial system.”
To contact the reporter on this story: Jeff Bater in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)