WASHINGTON, Jan 10 (Reuters) - The potential next head of a U.S. banking regulator outlined a comprehensive plan on Friday for a more relaxed approach towards the banking industry on issues spanning from capital to cryptocurrency.
Travis Hill, the Federal Deposit Insurance Corporation's vice chair, stated in his prepared remarks the necessity for a "new direction" at the FDIC, which he foresees will commence at the onset of President-Elect Donald Trump's second term.
Hill, a primary contender for the agency's full-time leadership position who will temporarily lead following Chairman Martin Gruenberg's departure, argued that regulators have gone too far in their oversight of the banking sector on various fronts and advocated for a change in approach.
In particular, Hill expects U.S. regulators to reassess attempts to enforce fresh capital requirements on major banks through the "Basel III Endgame." Progress on these regulations, which aimed to significantly boost capital for large banks through new risk measurements, was stymied during Democratic leadership. Hill proposed that the focus of the new endeavor should shift towards ensuring that rules are formulated with minimal capital impact.
He also recommended that regulators review current capital requirements, such as regulations concerning credit risk transfers and leverage, as part of this initiative.
"Taking a holistic and transparent approach... would be a much more effective strategy," he remarked in his prepared speech to the American Bar Association.
Hill further advocated for a more receptive posture towards new technologies adopted by banks, including digital assets and fintech collaborations. He criticized the FDIC's current stance of mandating individual approval for banks wishing to engage in blockchain-related activities as "detrimental" and suggested that the regulator concentrate on establishing clear standards for legally permissible operations.
His statements followed those of another potential Trump-appointed banking regulator, Federal Reserve Governor Michelle Bowman, who also expressed a desire for less stringent regulations for banks.
Bowman, viewed as a frontrunner for assuming the Fed's chief regulatory role, proposed a more "pragmatic" approach to rules rather than maintaining an "antagonistic" dynamic between banks and their overseers.