The summer torpor is about to dispel, and financial regulatory activity is about to heat up in Congress and beyond.
As has been noted in the financial and trade press, the Financial Choice Act, which was passed last month by the U.S. House of Representatives, now awaits a vote in the U.S. Senate. According to many members of the House and other Republicans — and as reported by GrayDC.com — the bill causes harm to smaller banks and enterprises in the United States while consumers do not accrue much in the way of benefits.
In a series of interviews with GrayDC, observers weighed in on the Financial Choice Act’s potential impact. Calling the legislation — which put capital and other requirements in place in the aftermath of the 2008 financial crisis — “a great start,” Paul Merski, executive vice president of Congressional relations and strategy at Independent Community Bankers of America, said smaller banks will be able to increase lending activity. In contrast, director of research at the Economic Policy Institute Josh Bivens warned, “We will have another recession driven by financial excess if we strip away these protections.”
Banks would be able to take on risky trading again, Bivens said, and could possibly be excessive in their risk taking.
In other regulatory news, one executive in Britain is calling for tighter financial regulations in the United Kingdom. Douglas Flint, departing chairman of Britain’s largest bank, HSBC, said in a statement that, amid issues such as Brexit and a revamp of the European financial order, a lack of homogeneity in regulation means there should be cooperation between overseers to find — and stop — “bad actors.” Flint advocated that “greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.”
The Guardian noted the remarks came as London is monitoring HSBC’s ongoing efforts to “clean up its business” following scandals tied to the bank’s tax avoidance ploys. Separately, the company was fined 1.2 million pounds by U.S. authorities on the heels of money laundering probes and other legal wranglings.
Flint has also called for a mandatory register of beneficial ownership of corporate entities existing on a country-by-country basis.
The governor of the Bank of England had his own pronouncements on the financial sector and necessary regulations in a rapidly growing sector. Mark Carney said the sector as a whole could double in the next quarter century, as reported in an interview with the Guardian, and the government should make sure not to “water down” regulation post-Brexit. In a statement on the regulatory credit crunch, Carney noted, “It's hard to remember how fraught it was.”
As for central banking and, specifically, the U.K’s central bank, he said, “We have a financial system that is ten times the size of this economy … It brings many strengths, it brings a million jobs, it pays 11 percent of tax revenue, it is the biggest export industry by some token … All good things. But it’s risky.”
Finally, in China, the central bank will look to include large internet finance firms in a risk and regulatory framework known as the Macro Prudential Assessment. Reuters, citing the official Xinhua news agency, said the framework already touches financial regulation across loans, equity investments and bonds. The oversight of internet firms will broaden to allow industry and local associations to play a bigger role in promoting technology. It will also speed up financial efficiencies across P2P lending and online payments, among other transactions.