U. S. Treasury Department calls for reforms in banking system
2023.03.28 19:53
U. S. Treasury Department calls for reforms in banking system
By Kristina Sobol
Budrigannews.com – The most important consumer financial watchdog agency said on Tuesday that the recent failures of mid-size U.S. lenders demonstrate the need for improved regulation and more robust risk management at banks and fintechs.
Purchaser Monetary Security Department Chief Rohit Chopra told a social event of retail financiers in Las Vegas that controllers were seeing liquidity, loan cost risk the board, capital systems, goal arranging and stress testing.
Chopra stated, “It will be good for the industry to have some honest conversations with itself about what is the way for the regulatory framework to not create this type of risk.” This is because the industry will benefit from doing so.
Chopra is also on the board of the Federal Deposit Insurance Corporation, which took over the failed Silicon Valley Bank earlier this month as part of its role as head of the CFPB. Additionally, he sits on the Financial Stability Oversight Council, which was established following the financial crisis of 2008.
Chopra described the implosion of SVB as “fast and furious.” He stated that “there’s no question it has been a dramatic movement of money,” despite the fact that customers’ scramble to move their funds has subsided.
“A clear data point that $100 billion dollar banks can really cause a lot of systemic risk and ultimately contagion across the financial system,” he said, referring to the collapse of SVB.
In recent days, lawmakers and lobbyists have argued over who is to blame for Silicon Valley Bank’s collapse. Some attribute the problem to bank leadership’s excessive risk-taking, a lack of regulatory oversight, or the 2018 rollback of key oversight provisions included in the 2010 Dodd-Frank Wall Street reform legislation.
Chopra, 41, is a close friend of Democratic U.S. Senator Elizabeth Warren and a key member of the current group of progressive financial and economic regulators under the Biden administration.
His firm calls for corporate accountability and deft policy messaging have earned him a reputation. He became an aggressive consumer advocate during his three years on the Federal Trade Commission.
As individual from the Majority rule minority, he pushed for punishing individual chiefs as opposed to just gathering more fines.
On Tuesday, U.S. President Joe Biden stated that while he has utilized all of the resources at his disposal to address the banking crisis, it is “not over yet.”
Additionally, Chopra expressed concern regarding the accumulation of risk in so-called non-bank financial firms, such as fintechs or cryptocurrency companies, many of which are under his agency’s supervision.
“Nobody truly accepts that there is no non-bank that could offer a similar kind of disease or same sort of fundamental impact,” said Chopra. ” I really have nightmares about a major disruption or failure of a large mortgage servicer.
Chopra’s appearance at the annual gathering of the Consumer Bankers Association was a rare opportunity to interact face-to-face with members of the industry. Some attendees were dissatisfied with Chopra’s manner and public remarks, particularly regarding the Biden administration’s overall campaign against “junk fees.”
Attendees were informed by former CFPB employee Brian Johnson that Chopra had been using the agency as a “bully pulpit” to influence industry behavior.
Yolanda McGill, Zest AI vice president and former CFPB attorney, stated that Chopra has attempted to accelerate rule changes through public statements because regulation changes and enforcement actions take longer to produce results.
Susan Sailor, an accomplice at Husch Blackwell LLP, clients were connecting with survey their expenses. ” She stated, “People are taking proactive measures.” Clients should be prepared to support their strategies.”
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