Stress Tests
On the annual stress tests now required of banks, the report says that they should instead be performed every two years. In addition, lenders that “maintain a sufficiently high level of capital” should be exempt from the exams, the Treasury said. Living wills, the plans lenders must submit to regulators to show they can be broken up without threatening the financial system, would also be required every two years instead of annually.
The report calls on Congress to boost the threshold for when a bank gets extra oversight from the Fed though no level is specified. It is currently $50 billion in assets.
The Treasury’s study criticized agencies for making overlapping requests to banks and said the “fragmented” regulatory system should be streamlined. The Financial Stability Oversight Council, a group of regulators tasked with monitoring risks to the banking system, should have more power to determine which agency writes and implements a particular rule, the Treasury said.
The Treasury review was spearheaded by Craig Phillips, a former BlackRock Inc. executive who was major fundraiser for Hillary Clinton’s presidential campaign. He is currently a senior aide to Mnuchin.
The banking report is one of several the department will release in the coming months to fulfill Trump’s executive order, which demanded a reevaluation of financial rules.
This article was provided by Bloomberg News.