The Fed’s chief banking regulator is expected to present a lecture on regional bank consolidation and capital requirements at Wednesday’s event

By Steve Gelsi

Fed Vice Chairman for Oversight Michael Barr to Outline Policy Priorities for the First Time

Newly appointed Federal Reserve Vice Chairman for Oversight Michael Barr is expected to address capital requirements for major regional banks, cryptocurrency issues, industry consolidation and Basel III guidelines requirements for big banks, one analyst said.

Barr is scheduled to speak Wednesday at 2 p.m. EST at the Brookings Institution’s Hutchins Center on Fiscal & Monetary Policy in his first major public policy remarks since becoming the top supervisor of banking regulation. from the Fed on July 19.

The speech will largely focus on making the financial system safer and fairer, according to a description of the event.

Cowen analyst Jaret Seiberg said Barr would likely approve of including large regional banks in the Fed’s requirements for total loss-absorbing capacity (TLAC), which is long-term debt that can be converted into shares if the banks face economic difficulties.

Another likely topic will be the consolidation of regional banks, which was touched on by Michael Hsu, acting Comptroller of the Currency.

While it’s unusual for a Fed official to comment specifically on pending mergers, Barr should reinforce Hsu’s past comments about the advantage of large regional banks, Seiberg said. Hsu also pointed out that larger organizations may have more difficult problems to solve if they have financial problems.

Among major banks such as JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), a hot topic is the phasing in of Basel III capital requirements.

While former Fed officials have said the final phase of Basel III may not include increased capital holding requirements, Barr should favor increasing capital requirements for big banks, Seiberg said. .

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As Fed Vice Chairman Lael Brainard has taken over as head of cryptocurrencies at the central bank, “we will focus on whether he is on the same page as … Brainard,” Seiberg said. .

Barr should address banks’ involvement in digital assets and could mention the Fed’s impending launch of its FedNow instant payments network next year, Seiberg said.

In July, the U.S. Senate voted 66 to 38 to nominate Barr for a four-year term as vice president overseeing the U.S. Federal Reserve.

Barr served as dean of public policy at the University of Michigan and served in US Treasury positions during the Clinton and Obama administrations. He has been described as a key force behind the 2010 Dodd-Frank financial reforms.

Barr replaced Trump-appointed Randal Quarles, who left the Fed in December. Former President Joe Biden’s pick for the job, Saule Omarova, withdrew his nomination in December

Also read: Odds of a half-point Fed rate hike rise slightly after August jobs data

-Steve Gelsi

 

(END) Dow Jones Newswire

09-06-22 1254ET

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