Treasury Pushback On Financial Regulation?

In U.S. regulatory news, the Treasury Department last week debuted a plan that would make sweeping changes to the country’s financial oversight.

As reported in various publications, the report, which clocks in at just about 150 pages, has, as Fortune noted, more than 100 rule changes. Those changes would dovetail nicely with some pushbacks on reforms post financial crisis that the Trump administration, some members of Congress and Wall Street would like and were confirmed by Treasury Secretary Steven Mnuchin.

Among the significant changes that would be wrought by the Treasury proposals is the lifting of rules that restrict larger banks on Wall Street from trading with their own capital, thus potentially boosting returns to those banks. Stress tests, which are conducted annually, would also be limited, with the end result of less capital being required to be on those firms’ books (again freeing up funds for investment). Perhaps the most visible rollback would come with a truncating of the Consumer Financial Protection Bureau (CFPB)’s regulatory powers.

“We were very focused on what we can do by executive order and through regulators,” Fortune quoted Mnuchin as stating. “We think about 80 percent of the substance in the report can be accomplished by regulatory changes and about 20 percent by legislation.”

As far as the CFPB is concerned, things proceed apace, as the bureau has issued a request for comment on proposed changes to rules on prepaid accounts. Those rules are tied to resolution of errors on accounts that were first proposed this past April. The rules would also make financial institutions (FIs) issuing those cards reveal a greater level of detail on fees.

Separately, IBM gives an inkling of how technology might be leveraged to help shape financial regulation. The tech behemoth is using Watson, the artificial intelligence platform, to launch software that helps FIs deal with financial regulations, with an eye on compliance. The three offerings cover the identification of regulations to which an FI must adhere, using advanced analytics to identify and combat criminal activity, and data and risk management. Those software products come from, respectively, Watson Regulatory Compliance, IBM Financial Crimes Insight and IBM Algo One Big Data Foundation.

Finally, across the pond, Securitieslendingtimes.com, amid others, reported on changes that might be coming for clearinghouse activity. Brussels (which can be considered a proxy for the EU) wants the power to say just how and even whether the non-EU clearinghouses should be able to process large amounts of Euro-denominated transactions. That may have implications for Brexit and beyond, as London has historically been seen as a financial center and that part of transaction settlement (that is, the clearinghouse part) “clears” $900 billion in daily value.


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