June 13, 2017
Executive Order 13772 instructs the Treasury Secretary to report to the President the extent to which the existing financial regulatory system promote the Administration’s “Core Principles” of financial regulation, which include empowering Americans to make independent financial decisions, save for retirement, build wealth and prevent taxpayer-funded bailouts. The principles also promote American competitiveness, both at home and abroad, while making regulation efficient, effective and appropriately tailored.
Washington, D.C. – The U.S. Department of the Treasury today issued its first in a series of reports to President Donald J. Trump examining the United States’ financial regulatory system and detailing executive actions and regulatory changes that can be immediately undertaken to provide much-needed relief.
“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy,” said U.S. Treasury Secretary Steven T. Mnuchin. “We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products – while ensuring taxpayer-funded bailouts are truly a thing of the past.”
Over the past four months, Secretary Mnuchin and other Treasury officials met with hundreds of stakeholders across the financial ecosystem, including community, independent, regional and large banks, regulators, FSOC members, consumer advocates, academics, analysts and investors. These listening sessions provided a very clear picture of redundancy, fragmentation, and inefficiency in our regulatory framework.
“We congratulate the House on passing the Financial CHOICE Act. The report we are releasing today focuses on solutions the Executive Branch can execute through regulatory changes and executive actions. We look forward to working on a parallel track with Congress to provide swift relief, particularly to community banks,” said Mnuchin.
The report issued today detailed the following findings:
· Community financial institutions – banks and credit unions – are critically important to serve many Americans
· Capital, liquidity and leverage rules can be simplified to increase the flow of credit
· We must ensure our banks are globally competitive
· Improving market liquidity is critical for the U.S. economy
· The Consumer Financial Protection Bureau must be reformed
· Regulations need to be better tailored, more efficient, and effective
· Congress should review the organization and mandates of the independent banking regulators to improve accountability
One of the recommendations is to expand the treatment of certain qualifying instruments under the Liquidity Coverage Ratio rule. Specifically, it recommends classifying high-grade municipal bonds as Level 2B assets.
As a next step, Treasury and the Administration will begin working with Congress, independent regulators, the financial industry, and trade groups to implement the recommendations advocated in the report through changes to statutes, regulations and supervisory guidance.
Today’s report is the first in a series of reports examining the U.S. financial regulatory system. Subsequent reports will be issued over the coming months and will focus on markets, liquidity, central clearing, financial products, asset management, insurance, and innovation, among other key areas.
The report is posted on Treasury’s website at: https://www.treasury.gov/press-center/press-releases/Documents/A%20Financial%20System.pdf.