Federal Deposit Insurance Corporation Vice Chairman Thomas Hoenig outlined a proposal for most of the country’s banks to get “regulatory relief,” but the country’s largest banks would not meet the criteria.
In prepared remarks to the 24th Annual Hyman P. Minsky Conference in Washington, D.C., Hoenig said that Congress should lessen the regulatory burden of banks that hold foreign exchange and interest-rate derivatives worth less than $3 billion, maintain an equity-to-asset ratio of at least 10%, and don’t engage in trading activity.
Of the more than 6,500 commercial banks, only about 400 do not meet these three conditions, including all of the banks with more than $100 billion in assets, Hoenig said.
“Given that activities of the more traditional banks pose less risk to the public, I suggest that meaningful regulatory relief for traditional banks — those that meet the criteria above — can be provided in a manner that is entirely consistent with safety and soundness,” he said.
Such relief could include:
A Wall Street Journal/Dow Jones article Wednesday said that Hoenig’s “quid-pro-quo idea” could expedite regulatory relief legislation, particularly since it focuses on regional and community banks and leaves intact stricter requirements for larger banks.
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