Fed Implores Congress to Preserve Key Financial Regulations

In his remarks to Congress, out-going New York Federal Reserve President William Dudley implored lawmakers to preserve and maintain key financial regulation measures in face of growing support for review of standing requirements. Dudley recently announced his decision to retire from his position earlier (mid-2018) than his term allots. According to a Reuters article, part of Dudley’s responsibilities as New York Fed President extend to being a “point-person” for Wall Street. The New York branch serves as the Fed’s eyes and ears on Wall Street, providing on-the-ground reports of activity to the central bank.

“Do no harm”

The phrasing Dudley used in asking Congress to preserve key regulations underscores the imperatives of the measures he his trying to preserve. Many of the core financial regulations in place today are a direct result of the 2008 crisis – which was itself a direct result of lack of sufficient regulation and oversight. The effects of the financial crisis were far-reaching and deep. We all experienced the negative effects and there are still people trying to recover what they’ve lost. It’s been a slow climb back to stable levels, but our economy is rebounding and investor activity is healthy; in fact, Wall Street indices have reached record highs over the last year. A return to normalcy could not have been achieved without the financial regulations put in place following the crash. While it seems that a review and potential overhaul of current measures is likely, eliminating the regulations that have helped us recover would not only be unwise, but could actually cause real harm to our economy. Fed experts also warn that financial deregulation can be a slippery slope, leading to massive unwinding of protective measures.

Key Financial Regulations

While Dudley did agree that some current regulation warrants adjustment, the key regulations maintaining a healthy financial industry must remain untouched. Among the key financial regulations, he listed standards upholding stronger capital, liquidity, and clearing must be kept in place.