US banking regulators will be questioned by Congress over the capital raising plan

US banking regulators will be questioned by Congress over the capital raising plan

Regulators testify before a Senate banking hearing about recent bank failures on Capitol Hill in Washington

Federal Reserve Board Vice Chairman for Supervision Michael Barr testifies before a Senate Banking, Housing and Urban Affairs Committee hearing in the wake of recent bank failures, on Capitol Hill in Washington, US, May 18, 2023. REUTERS/Evelyn Hochstein/Get Rights Licensing

WASHINGTON, Nov 14 (Reuters) – The Federal Reserve’s top Wall Street official, Michael Barr, and other bank regulators will defend plans to increase capital requirements for U.S. banks when they appear before Congress this week, as they come under mounting pressure from many lawmakers to curb… Uncompromising their requirements. efforts.

Barr, the Federal Deposit Insurance Corp.’s Martin Gruenberg, and Acting Comptroller of the Currency Mike Hsu will appear before the Senate Banking Committee on Tuesday at 10 a.m. ET (1500 GMT) and the House Financial Services Committee on Wednesday at 9:30 a.m. ET. (1430 GMT).

This will be the officials’ first appearance on Capitol Hill since the “Basel III final” rules were proposed in July, and will provide insight into where the Democratic-led committee stands on the issue.

The proposal would reform how banks measure risk, and therefore how much capital they should hold against potential losses.

Regulators say stronger cash reserves will make the financial system safer and are particularly important after the failure of three banks earlier this year. But lenders attacked the proposal, saying it would hurt lending and the broader US economy.

“Neither banks nor supervisors can anticipate all emerging risks. That’s why it’s also important to help ensure that our regulatory framework sets a strong baseline for resilience,” Barr will tell lawmakers, according to prepared testimony released by the Senate Banking Committee on Monday. .

As part of their campaign to kill the Basel proposal, banks have been lobbying lawmakers to pressure regulators. On Monday, 39 Republican senators intensified their pressure, calling on regulators to cancel the proposal, citing the economic damage.

Analysts and lobbyists will be watching closely Tuesday to ascertain where more moderate Democrats like Sens. Mark Warner of Virginia and Jon Tester of Montana stand on the issue.

“The most important voices during this hearing will be from centrist Democrats, whose tone and tenor will influence industry comments and the Fed’s response to those comments in the final rulemaking,” said Isaac Boltanski, director of policy research at brokerage BTIG.

Gruenberg may also be pressed on a Wall Street Journal report that said female employees left the regulator because of its “toxic” culture and that misconduct went unpunished.

Gruenberg told employees in an internal video on Monday that the FDIC does not tolerate harassment and has hired an outside firm to review its practices, according to the agency.

Officials may also be questioned about a ransomware attack on the US arm of China’s largest bank, the Industrial and Commercial Bank of China, which disrupted trading in the $26 trillion US Treasury market on Thursday.

(Reporting by Michelle Price and Pete Schroeder – Prepared by Mohammed for the Arab Bulletin – Prepared by Michelle Price and Pete Schroeder) Editing by Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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He covers financial regulation and policy out of Reuters’ Washington bureau, with a particular focus on banking regulators. He has covered economic and financial policy in DC for 15 years. Previous experience includes roles at The Hill and The Wall Street Journal. He holds a master’s degree in journalism from Georgetown University and a bachelor’s degree from the University of Notre Dame.

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