US bank chiefs welcome regulatory reform
The chief executives of US banks have spent so long complaining about regulations that they can scarcely believe their luck at the impending relaxation.
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The prospect of regulatory reform for the US banking sector got a cautious welcome from bank chief executives as they reported second-quarter earnings in July. But some also complained that progress had been slow on moving to an environment that allowed banks and corporations to contribute to the growth of the economy.
James Gorman, CEO of Morgan Stanley, was upbeat despite what had been a difficult trading environment, identifying three positive tailwinds for the industry: reforms to capital requirements, reforms to corporate taxation and a rising rate environment. And after eight years of mounting burdens for financial institutions, “it’s fair to say that now is the time to make practical changes to the multitude of regulations to allow US banks to be greater engines of economic growth”, he said.
The changes were proposed in a US Treasury white paper published in June by Treasury secretary Steven Mnuchin. Bankers are feeling happier than usual about the prospect of reform right now because the report demonstrates two things: one, a willingness to act; and two, an ability to do so, given that the majority of the 100-odd recommendations made in the report do not require legislation.