Fed's Quarles Draws Regulatory Road Map for Relaxing Bank Rules

By Jesse Hamilton

January 19, 2018 at 10:07 AM

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Federal Reserve Vice Chairman Randal Quarles, the central bank's supervision chief, shared a laundry list of ways to make regulation less burdensome for Wall Street — including streamlining capital rules, overhauling post-crisis limits on trading and major changes to how the agency stress-tests banks.

"Confusion that results from overly complex regulation does not advance the goal of a safe system," Quarles said Friday in remarks prepared for an American Bar Association conference in Washington.

The wide-ranging speech set an ambitious agenda for the Fed, including a mission to cut back the complex system of ways banks prepare for losses in a future financial crisis.

"While I am advocating a simplification of large-bank loss-absorbency requirements, I am not advocating an enervation of the regulatory capital regime," said Quarles, the former Carlyle Group managing director who has given few public speeches he started at the Fed in October.

He said he also intends to ease the burdens of stress testing and the bank-drafted living wills meant to plan for a bankruptcy.

Regulators also are working on a new version of the Volcker rule restrictions on banks' trading.

In what may be the most urgent item on his agenda, he said, the agency is finishing its "near-term" effort to rewrite limits on how leveraged big banks can be.

The Fed has been writing a new leverage-ratio proposal along with the Office of the Comptroller of the Currency, people have said.