Stanley Fischer about plans to unwind banking regulation.
One of the Federal Reserve’s top policymakers has attacked attempts to reverse the post-crisis drive for tougher regulation, calling efforts to loosen constraints on banks “dangerous and extremely short-sighted”. Leading Federal Reserve policymaker Stanley Fischer has hit out at plans to unwind banking regulation, brandishing it a “terrible mistake.” Leading Federal Reserve policymaker Stanley Fischer has hit out at plans to unwind banking regulation. Fischer said the repeal of Dodd Frank and loosen other policies would see banks return to habits seen before the financial crisis. Fischer added that smaller banks could see looser regulations.
In an interview with the Financial Times, Fischer said that efforts by the U.S. administration to strip back the rules put in place 10 years ago would lead large institutions to return to the status quo that led to the financial crisis.
President Donald Trump and republican politicians have advocated the repeal of Dodd Frank, a major piece of post-crisis legislation, and the loosening of some capital and liquidity requirements in a bid to ease banks’ ability to lend.
“It took almost 80 years after 1930 to have another financial crisis that could have been of that magnitude. And now after 10 years everybody wants to go back to a status quo before the great financial crisis,” Fischer, the vice-chairman of the Fed’s board of governors, said.
“I find that really, extremely dangerous and extremely short-sighted.”
Fischer has, however, endorsed efforts to ease regulations for small banks, claiming it would help balance the banking system.
“The Congress is very involved in these things and the pressure is on now to ease up. The pressure to ease up on small banks is fine with me.
“But the pressure I fear is coming to ease up on large banks strikes me as very, very dangerous.”
The US Treasury in June put out a 147-page report that recommended, among other things, changing the frequency and the severity of the Fed’s process of stress-testing the strength of the big banks, scrapping the “gold-plating” of global capital and liquidity standards for the largest US lenders, and implementing a looser interpretation of the Volcker ban on banks making speculative bets with their own capital.
Any market volatility will probably be finite in time, Fischer said. “There is also a desire to say that we have some confidence that the system is pretty damn stable.” There will probably be a break between the announcement of the unwinding of QE and the start of the process, Mr Fischer added, and the central bank could always press pause if unanticipated circumstances arise.
Stanley Fischer is an economist and the vice chair of the U.S. Federal Reserve System. Born in Zambia, he holds dual citizenship in Israel and the United States. He served as governor of the Bank of Israel from 2005 to 2013. He previously served as chief economist at the World Bank. On January 10, 2014, United States President Barack Obama nominated Fischer to be Vice-Chairman of the US Federal Reserve Board of Governors.
Fischer received an honorary doctorate from Hebrew University in 2006. In October 2010, Fischer was declared Central Bank Governor of the Year by Euromoney magazine.
He is a member of the Bilderberg Group and attended its conferences in 1996, 1998 and 1999. Apparently he also attended the Bilderberg conference in 2011 in St. Moritz, Switzerland. However, his name does not show up on the list of participants for the year 2011 as of March 2016. He is also a Distinguished Fellow in the Council on Foreign Relations (CFR). Fischer was named a Distinguished Fellow of the American Economic Association in 2013. He is also a member of the Inter-American Dialogue.