WASHINGTON (Reuters) - A U.S. Treasury Department plan for reworking financial rules would reduce regulatory overlap and help the economy, the official tasked with drawing up the proposal said, rebutting criticism from Democratic lawmakers that the effort was aimed at boosting bank profits.
Craig Phillips, counsellor to Treasury Secretary Steven Mnuchin, said on Tuesday that while banks had given a warm welcome to the many policy recommendations in a 148-page report released on Monday, the proposed changes were not issued with the goal of aiding Wall Street.
“This is not a plan to help banks,” he said at a financial industry conference in Washington. “Our goal is to guide a regulatory path that helps banks better serve their customers without putting taxpayers at risk or lowering the standards that are appropriate.”
U.S. President Donald Trump, a Republican, is pushing for deregulation across the federal government.
Banking lobbyists and executives in Washington praised the Treasury Department report for its roughly 100 recommendations to streamline, relax or remove a range of the government’s regulatory powers to police Wall Street.
“The report is basically our entire wish list,” said one banking lobbyist who asked not to be named.
Financial trade organizations called the report a much-needed reconsideration of rules put in place following the 2007-2009 financial crisis.
The report earned scorn, however, from advocates for tougher rules, like Senator Elizabeth Warren, who said on Monday it catered too much to Wall Street demands at the expense of consumers.
Phillips, a former executive at BlackRock Inc (BLK.N), the world’s largest asset manager, said the plan was aimed at simplifying rules to ensure financial institutions can generate as much economic activity as possible.
“There’s overlap, there’s duplication, there’s confusion,” he said of the current regulatory load.
As an example, Phillips questioned the need for two regulators, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, to conduct parallel probes into Wells Fargo & Co (WFC.N) following a recent sales practices scandal.
The Treasury Department did not go into detail in terms of implementing key aspects of the report, such as how to change the $50 billion asset threshold for when banks face tougher regulation.
Banks above that $50 billion level are subject to heightened regulations including the requirement they submit “living wills” to regulators and pass stress tests on their portfolios.
But Phillips indicated the Treasury is open to major changes, suggesting an asset threshold as high as $500 billion, or one that emphasizes risk and complexity over size.
He also said the Treasury would release three more reports in the coming months recommending regulatory changes, aimed at capital markets, asset managers, insurance and fintech. The reports will likely come sometime in September, he added.
Reporting by Pete Schroeder and Olivia Oran; Editing by Meredith Mazzilli