Democrat vows to halt easing of financial rules
W regulations once her party takes power in the US House of Representatives in January.
California Representative Maxine Waters is expected to lead the House Financial Services Committee once the next Congress begins, and her remarks signaled what could be a substantial shift in oversight.
“Make no mistake, come January ... the days of this committee weakening regulations and putting our economy once again at risk of
to an end,” Waters said.
An already fragile Wall Street took the news badly, with major indices closing lower, driven in part by falling share prices for
Goldman Sachs and JP Morgan Chase.
Waters spoke ahead of twiceyearly testimony by Federal Reserve Board Governor Randal Quarles, the central bank’s vice chairman for banking supervision.
In May, lawmakers, including many Democrats, approved a rollback of certain provisions in the 2010 Dodd- Frank Wall Street reform legislation, freeing thousands of small banks from the heightened federal oversight intended to prevent a repeat of the
Advocates said such regulations, including stress testing, were too onerous for smaller banks with assets below $ 250 billion and the changes would help spur the economy.
Since last year, federal regulators, including the Fed, have also removed “too big to fail” designations from the insurance giants AIG and Prudential Financial, meaning they too face less stringent requirements.
Waters also said the Fed must
institutions and “make strong use” of existing powers to punish legal violations.
Quarles said in his testimony that the Fed was “very much aware of the dangers of complacency” but that the banking system as a whole continued to be well capitalized and continued to make improvements in how it managed risks.
The changes represented a “step forward in regulatory ef
- anced framework where riskier activities and a larger systemic footprint correspond to higher supervisory and regulatory requirements.”
“I wouldn’t view that in any way as weakening regulation,” Quarles said in answering lawmakers’ questions.
“I think that’s an appropriate alignment of regulation.”