WASHINGTON, June 4 – Three leading federal banking regulators will appear before Congress Thursday to defend their ongoing efforts to reduce banking regulations and oversight, claiming these changes will boost economic growth and encourage innovation while keeping appropriate protections in place.
The heads of the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency are scheduled to appear before the House Financial Services Committee, where they will provide updates on their wide-ranging review and relaxation of multiple banking regulations enacted after the 2008 financial crisis.
“By tailoring requirements to actual risk, focusing supervision on what truly matters, and integrating innovation into the regulatory framework, the Federal Reserve is creating conditions for banks to thrive while maintaining the robust safeguards,” said Fed Vice Chair for Supervision Michelle Bowman in prepared remarks posted Wednesday.
Bowman and her counterparts have been actively reviewing stricter standards implemented in recent years, contending that excessive regulatory oversight has limited banks’ capacity to support economic growth. As an example, Bowman explained that the Fed has discovered examiners have identified many bank shortcomings that were merely procedural or paperwork issues, rather than genuine financial threats.
“For over a year, we have been reforming supervision to focus on material financial risks rather than on process-oriented, check-the-box requirements,” said FDIC Chairman Travis Hill in his prepared remarks.
The regulators also plan to inform lawmakers about their desire to promote innovation within the financial industry, both through banks adopting blockchain technologies and artificial intelligence, and through nonbank entities.
“Our job is to facilitate, not stymie, responsible innovation,” said Comptroller Jonathan Gould in prepared testimony.
Nevertheless, they also cautioned that emerging technologies create new risks for banks. Bowman pointed out that new AI models have “dramatically accelerated” the identification of vulnerabilities in the banking system.
