[TE Summary] Jun 15th '17 Regulating America's banks - The Treasury publishes proposals to cut red tape
Regulating America's banks
The Treasury publishes proposals to cut red tape
The Dodd-Frank Act gave regulators discretion to do more. And, under Donald Trump, to do less
http://www.economist.com/news/finance-and-economics/21723405-dodd-frank-act-gave-regulators-discretion-do-more-and-under-donald-trump?frsc=dg%7Ce
Print edition, Finance and economics, June 15th, 2017
Summary
1. Mr. Trump directed his Treasury secretary, Steven Mnuchin, to measure all rules as well as Dodd-Frank Acts for the prevention of bail-outs and more efficient regulation.
2. The first part of reform implied by a report submitted by Steven Mnuchin, would be more eased rules, less burdensome "stress test", and more tamed CFPB with FSOC to allay confusions.
3. The report's underlying thesis is that tight regulations held back lending and, ultimately, led to sluggish economic growth.
4. Nevertheless, the report neglected the possibility that slow growth may instead lower demand for credit: only 3% firms wanted to borrow more, but lack of skilled workers was a bigger concern for them
5. Small banks are excited because nearly every policy they wanted were adopted in the report
6. Mnuchin's suggestion includes easier buying of mortgages by Fannie Mae and Freddie Mac, protection from lawsuits by borrowers, delaying higher reporting requirement for home loans and exempt community banks for Base 3.
7. Mr. Mnuchin wants Dodd-Frank's stress test requirement to raise from $10bn to $50bn, and banks also want the lower limit for the most exacting prudential standards and Fed's separate capital adequacy reviews to be raised from $50bn covering more than 30 banks, but didn't specify by how much.
8. Banks complained Fed's secretive models and unrealistic scenarios in the capital-adequacy review assessing how much equity to be burnt in a crisis and argue that the Fed should rethink to open the models and conduct it biennially along with "living wills".
9. Cash and Treasury bonds make up 24% of big banks' total equities, so changing how capital is measured will allow banks to have less equity on their balance-sheets.
10. Changing stress-test and capital-review limits, an overhaul of the Community Reinvestment Act of 1977 and Volcker rule have little chance to approved in the Senate, needing Democrats' approval,
11. Nevertheless, most, 62, of 97 proposals rely only on regulators has been and will be chosen by the president, so changes are expected to come pretty soon.
Words and expressions
0. red tape: excessive bureaucracy or adherence to rules and formalities, especially in public business
1. recast: give (a metal object) a different form by melting it down and reshaping it
2. installment: any of several parts of something that are published, broadcast, or made public in sequence at intervals
3. onerous: (of a task, duty, or responsibility) involving an amount of effort and difficulty that is oppressively burdensome
4. allay: diminish or put at rest (fear, suspicion, or worry)
5. tame: (of an animal) not dangerous or frightened of people; domesticated
6. CFPB: Consumer Financial Protection Bureau
7. FSOC: Financial Stability Oversight Council
8. scant: barely sufficient or adequate
9. cock-a-hoop: extremely and obviously pleased, especially about a triumph or success
10. exacting: making great demands on one's skill, attention, or other resources
11. biennially: every two years
Permalink
http://eoesociety.blogspot.com/2017/06/te-article-summary-jun-15th-17.html
The Treasury publishes proposals to cut red tape
The Dodd-Frank Act gave regulators discretion to do more. And, under Donald Trump, to do less
http://www.economist.com/news/finance-and-economics/21723405-dodd-frank-act-gave-regulators-discretion-do-more-and-under-donald-trump?frsc=dg%7Ce
Print edition, Finance and economics, June 15th, 2017
Summary
1. Mr. Trump directed his Treasury secretary, Steven Mnuchin, to measure all rules as well as Dodd-Frank Acts for the prevention of bail-outs and more efficient regulation.
2. The first part of reform implied by a report submitted by Steven Mnuchin, would be more eased rules, less burdensome "stress test", and more tamed CFPB with FSOC to allay confusions.
3. The report's underlying thesis is that tight regulations held back lending and, ultimately, led to sluggish economic growth.
4. Nevertheless, the report neglected the possibility that slow growth may instead lower demand for credit: only 3% firms wanted to borrow more, but lack of skilled workers was a bigger concern for them
5. Small banks are excited because nearly every policy they wanted were adopted in the report
6. Mnuchin's suggestion includes easier buying of mortgages by Fannie Mae and Freddie Mac, protection from lawsuits by borrowers, delaying higher reporting requirement for home loans and exempt community banks for Base 3.
7. Mr. Mnuchin wants Dodd-Frank's stress test requirement to raise from $10bn to $50bn, and banks also want the lower limit for the most exacting prudential standards and Fed's separate capital adequacy reviews to be raised from $50bn covering more than 30 banks, but didn't specify by how much.
8. Banks complained Fed's secretive models and unrealistic scenarios in the capital-adequacy review assessing how much equity to be burnt in a crisis and argue that the Fed should rethink to open the models and conduct it biennially along with "living wills".
9. Cash and Treasury bonds make up 24% of big banks' total equities, so changing how capital is measured will allow banks to have less equity on their balance-sheets.
10. Changing stress-test and capital-review limits, an overhaul of the Community Reinvestment Act of 1977 and Volcker rule have little chance to approved in the Senate, needing Democrats' approval,
11. Nevertheless, most, 62, of 97 proposals rely only on regulators has been and will be chosen by the president, so changes are expected to come pretty soon.
Words and expressions
0. red tape: excessive bureaucracy or adherence to rules and formalities, especially in public business
1. recast: give (a metal object) a different form by melting it down and reshaping it
2. installment: any of several parts of something that are published, broadcast, or made public in sequence at intervals
3. onerous: (of a task, duty, or responsibility) involving an amount of effort and difficulty that is oppressively burdensome
4. allay: diminish or put at rest (fear, suspicion, or worry)
5. tame: (of an animal) not dangerous or frightened of people; domesticated
6. CFPB: Consumer Financial Protection Bureau
7. FSOC: Financial Stability Oversight Council
8. scant: barely sufficient or adequate
9. cock-a-hoop: extremely and obviously pleased, especially about a triumph or success
10. exacting: making great demands on one's skill, attention, or other resources
11. biennially: every two years
Permalink
http://eoesociety.blogspot.com/2017/06/te-article-summary-jun-15th-17.html
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