WASHINGTON–Federal regulators are reportedly preparing to slash regulations that were put in place to prevent the 2008 financial crash from repeating.
The move is part of the Trump administration’s broader effort to push deregulation on all fronts.
The move to rollback the post-financial crisis rules follows heavy lobbying by the banking industry, by lenders such as JP Morgan and Goldman Sachs, which have “long complained that competition and lending have been hindered by burdensome rules governing the assets they must hold versus their liabilities,” according to the Financial Times.
Summer Plans
The Financial Times said it has learned from unnamed sources that regulators are expected to offer proposals this summer that are aimed at cutting the supplementary leverage ratio that requires big banks to hold high-quality capital against risky assets, including loans and derivatives.
The rules that were put in place after 2008 as part of efforts to “shockproof the banking system and avoid damaging ripple effects that could cause another global economic meltdown,” noted the Times. “The crisis forced governments to spend billions of dollars bailing out big lenders that took too much risk. Since that time credit unions have repeatedly stated that they did not cause the crisis, but have been caught up in complying with many of the rules that followed.’
Winning the ‘Ear’
“While some critics warn it is the wrong time to slash protections, given growing uncertainty over policy overhauls and market volatility, banks seem to have won the ear of policymakers,” the Financial Times stated. “Lobbyists have long argued that the rules punish them for holding relatively low-risk assets including U.S. debt, known as treasuries, and hinders their ability to provide more loans.”
