Barr Sees Big Bank Deregulation as Threat to Community Banks

(Bloomberg) -Federal Reserve Governor Michael Barr, in the period of Trump, said that the latest capital proposals threatened to protecting for smaller banks, and the Wall Street is taking action to relax the rules on lenders and to relieve the control of Wall Street lenders.

“As community bankers knew well, the community banks that fueled the 2008 financial crisis were not the most complex companies that have reduced the system.

Barr stressed that proposals of withdrawing capital standards threaten to erode important guards. Organizers want to take back some requirements such as overhauling stress tests that measure how large banks will encounter during a hypothetical recession.

“These shifts do not make the system safer, if the biggest players stumbles, they will leave the community banks once again,” he said.

Wall Street lending giants have long been forced to change in regulations based on capital requirements, argued that they are very burdensome and prevent their functional ability. However, consumer defenders say that harsh rules and strict control aim to prevent future bank failures and another financial crisis.

Barr’s comments are prevented a conference on community loans to be organized by Michelle Bowman, the best bank keeper of the Fed this week.

Bowman also emphasized that it focuses on relaxing regulations for the smallest lenders, and that his approach to Community Bank’s supervision will help them put these companies on stronger foundations.

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