Federal Reserve Vice Chairman for Supervision Randal Quarles testified in front of the House Financial Services and Senate Banking Committees last month.
On Nov. 14-15, Quarles spoke to the congressional committees about the Federal Reserve’s supervision and regulation of the financial system, largely the central bank’s oversight of large financial institutions and the Community Reinvestment Act.
There were also discussions surrounding the Volcker Rule, which is intended to prevent banks from engaging in risky behavior through short-term, proprietary trading using the bank’s deposits. In practice, the rule has proven to be complicated and burdensome, ACG recently submitted a comment letter on the subject. In particular, Rep. Bill Huizenga, R-Mich., and Rep. French Hill, R-Ark., expressed support for H.R.4790—bipartisan legislation passed out of the House, and sponsored by Rep. Hill, that would streamline the regulation and enforcement of the Volcker Rule from five agencies to one: The Federal Reserve.
Additionally, Rep. Ed Perlmutter, D-Colo., expressed concern about the increasing effects of automation. ACG expects this to become a continuing theme in the 116th Congress.
Senate conversations echoed the House with regards to large financial institution oversight and the Community Reinvestment Act. Senator Elizabeth Warren (D-Mass.) expressed considerable concern to Vice Chairman Quarles surrounding the state of leveraged lending, echoing concerns outlined in her letter to the five regulators responsible for leveraged lending regulation. The House hearing displays the continued focus on tailoring portions of the Dodd-Frank Act to ensure it is targeting systemically-risky areas, while the Senate hearing displays the trend towards an increased focus on leveraged lending.