Today, The Clearing House Association submitted a paper to the Treasury Department as part of an effort to help support Treasury’s study of how financial regulation could be better aligned with the core principles for financial regulation identified in President Trump’s Executive Order 13772. After nearly a decade of fundamental and continuing changes to financial regulation, now is an opportune time to take stock of our existing regulatory regime and ensure that it best serves the American economy.
The paper identifies existing regulations and supervisory practices that are inconsistent with the Core Principles and provides recommendations to improve them. In particular, it focuses on eight core areas:
1. Capital Regulation;
2. Liquidity Regulation;
3. Bank Living Wills;
4. Activity Limitations;
5. Supervision, Examination & Enforcement;
6. Bank Governance;
7. Risk Management; and
8. Tailoring of Regulation.
For each of these areas, this paper: (i) describes the regulatory status quo; (ii) identities particular polices that are inconsistent with the Core Principles; (iii) recommends high-level guiding principles to guide their reform; and (iv) recommends specific policy changes to achieve that reform. Except as noted, the recommendations described in this paper focus on regulatory or supervisory changes, not legislative changes.