Regulatory reform

By purchasing additional assets and securities, the Federal Reserve provided the financial markets with enough liquidity to weather the pandemic recession. But with the economy starting to recover, it needs to reduce such funding before it creates dangerous bubbles over the long term, say two former bankers.

Free investment education and testing for risk tolerance are among the ways financial firms can better reach underserved consumers, former SEC chief Jay Clayton and Operation HOPE’s John Hope Bryant say.

The Federal Reserve will determine within days whether to extend the easing of the supplementary leverage ratio for big banks past March 31, Chairman Jerome Powell says. And it's a couple of weeks away from announcing whether there will be limits on second-quarter dividends and buybacks, he says.

In its final days, the Trump administration imposed limits on Fannie Mae and Freddie Mac’s holdings of mortgages with loan-to-value ratios above 90% and certain other characteristics. Critics say the changes were unnecessary and disproportionately penalize borrowers of color.

The bill introduced by Rep. Patrick McHenry, the top Republican on the Financial Services Committee, would expand CFPB authority to the credit reporting industry and require that certain adverse information be removed from a consumer’s credit history.

Many in Washington have been in suspense about whether the Biden administration would favor a former Obama official or a financial inclusion advocate for comptroller of the currency. Mehrsa Baradaran, the candidate preferred by community activist groups, appears to have the edge.

The comments by Federal Deposit Insurance Corp. Chair Jelena McWilliams published in Politico reinforce optimism that the banking agencies could settle years of disagreement about modernizing the Community Reinvestment Act.

Regulations that merely reflect the beliefs of whoever’s in power undoubtedly get unwound by the next round of leaders. Policies will stand the test of time if they are focused on addressing inequalities in the financial system.

The industry wants regulators to extend a temporary measure making it easier to satisfy the supplementary leverage ratio. But Democrats’ control of the White House and Congress has given a bigger platform to those who say banks have had enough relief.

Sens. Elizabeth Warren and Sherrod Brown urged regulators not to give in to industry requests to extend a temporary policy easing compliance with the supplementary leverage ratio.