Trump Treasury’s Blueprint for Financial Regulation in the Banking World

From: New York Law Journal

George W. Madison, Michael E. Borden and Michael D. Lewis

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In June, the Treasury Department issued a report, “A Financial System That Creates Economic Opportunities: Banks and Credit Unions,” that serves as the most detailed roadmap yet on how Congress and the federal financial regulators might revisit the post-financial crisis regulatory framework. It is a blueprint primarily for loosening regulation of the U.S. banking sector. The recommendations in the Treasury report represent a wide-ranging rethinking of the rules governing banks and credit unions. If the recommendations were implemented in full or in large part, they would meaningfully reduce costs and other burdens for many institutions. Critics say they would negatively impact the financial system.

The Treasury report is the first in a series of four that are being issued pursuant to Executive Order 13772 on Core Principles for Regulating the U.S. Financial System. The other three will address capital markets, the asset management and insurance industries, and non-bank financial institutions and financial technology and innovation. Separately, the Treasury Department intends to issue recommendations regarding “orderly liquidation authority” established under Title II of Dodd-Frank as well as recommendations regarding the process by which the Financial Stability Oversight Council (FSOC) of financial regulators designates non-bank financial institutions and financial market utilities for heightened supervision. In addition to reviewing published data and other materials, the Treasury Department consulted with a range of stakeholders in preparing its report, including all of the major federal financial regulators and a large number of industry participants, trade groups, consumer advocacy groups, academics and others. However, a clear majority of those stakeholders were industry participants and the trade groups representing them.

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