Fed finalizes post-crisis rule easing for domestic, foreign banks (updated)

Beacon Financial

10/10/2019 18:51

(Adds detail and context)
    By Pete Schroeder
    WASHINGTON, Oct 10 (Reuters) - The U.S. Federal Reserve on
Thursday unveiled a final package of rules easing capital and
liquidity requirements for domestic U.S. and foreign banks that
were originally introduced following the 2007-2009 global
financial crisis.
    The changes, which should reduce the compliance burden and
free up funds for U.S. Bancorp  USB.N , Capital One  COF.N  and
PNC Financial  PNC.N  among others mark another win for the
industry after the Fed also relaxed rules on derivatives trades
and banks' annual health checks. 
    Thursday's package stems from bipartisan legislation passed
by Congress in May 2018 that rewrote parts of the 2010
Dodd-Frank financial reform law. 
    That 2018 law ordered the Fed to reduce the burden on
community and regional lenders, but progressive Democrats and
consumer groups are likely to criticize the central bank for
giving larger banks too much leeway with its final changes.
    The Fed on Thursday said the changes, which it first
proposed in October last year, aim to more closely tailor
regulations to the riskiness of firms' businesses. 
    The final domestic rules, which are nearly identical to the
2018 proposal, establish tiers of regulations for larger U.S.
banks. Domestic banks with under $700 billion in assets, which
includes all but a handful of the nation's largest firms, would
enjoy some degree of relaxed capital and liquidity rules.
 urn:newsml:reuters.com:*:nL2N1XB0VG
    Fed staff estimated the final rules would lower capital
requirements by about 0.6% and liquidity requirements would drop
by about 2% for all affected banks.
    Globally systemically important U.S. banks, including
JPMorgan Chase & Co  JPM.N , Bank of America Corp  BAC.N ,
Citigroup Inc  C.N , Goldman Sachs Group Inc  GS.N  and Morgan
Stanley  MS.N  would not benefit from the changes however.
    On Thursday the Fed also finalized a new regulatory regime
for foreign banks operating in the United States. The rules
relax capital, liquidity and stress testing requirements for
subsidiaries of foreign banks but retain stricter standards for
firms that engage in riskier activities like short-term
funding. urn:newsml:reuters.com:*:nL1N21Q0ER
    Thursday's rules package also includes a relaxed schedule
for when foreign and domestic banks must submit "living wills"
to the regulator detailing how they could be safely dissolved.

 (Reporting by Pete Schroeder; editing by Michelle Price and
Cynthia Osterman)
 ((mailto:Pete.Schroeder@thomsonreuters.com; 202-310-5485;))