Quarles lays out road map for bank regulations

The Federal Reserve's top official on financial regulation is putting forward a wide-ranging agenda for improving the way the nation's banks are regulated, saying he wants to focus on "efficiency, transparency and simplicity."

Randal Quarles, the Fed's vice chairman for supervision, said Friday that he is looking at such things as improving the Fed's annual stress test of the nation's biggest banks — the rules governing the capital cushion banks are required to hold against loan losses — and the "living wills" the biggest banks have to draw up to show how they can be shut down if they become insolvent.

Quarles, a Utah investment executive, was nominated by President Donald Trump to be the point person in administration efforts to loosen the regulations put in place in the wake of the 2008 financial crisis.

In a speech to a banking conference of the American Bar Association, Quarles said that now was a good time to review the new rules put in place after the crisis.

"Now is an eminently natural and expected time to step back and assess those efforts," Quarles said. "It is our responsibility to ensure that they are working as intended and ... it is inevitable that we will be able to improve them, especially with the benefit of experience and hindsight."

In such areas as the "Volcker rule," which restricts the type of investments banks can make with their own funds, Quarles said the goal will be to build on work that regulators have already started to make the rule more workable.

During the 2016 presidential campaign, Trump was highly critical of the Dodd-Frank Act passed in 2010. He said it had imposed overly burdensome rules on banks that had restricted their ability to make loans and had cut into economic growth.

The nomination of Quarles was Trump's first move to remake the Fed. Trump has also nominated Fed board member Jerome Powell to succeed current Fed Chair Janet Yellen when her term ends on Feb. 3 and Marvin Goodfriend, an economics professor at Carnegie Mellon University, for an empty Fed board seat. When Yellen leaves the board next month, Trump will still have three empty seats to fill on the seven-member board.