In remarks to a U.S. Bancorp industry meeting, the U.S. Department of the Treasury’s Deputy Secretary Michael Faulkender set out the administration’s priorities for “responsibly modernizing” bank regulation and supervision, with a focus on reducing regulatory burden and sharpening oversight on material financial risks. He also pointed to an executive order requiring the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve to submit regulatory actions for review at the Office of Management and Budget, and said Treasury will play a greater role in harmonizing regulators’ approaches without consolidating agencies. The speech framed Treasury’s principles as statutory grounding, cost-benefit efficiency, fairness and consistency across firms and time, and greater transparency and efficiency from regulators. On supervision, it called for a shift away from “box checking” and reputational-risk driven criticisms, including tighter examination procedures, monitoring examiner compliance, defining “unsafe and unsound” by rule using more objective measures rooted in financial risk, and creating a more realistic process for appealing supervisory findings, including access to confidential supervisory information. On capital and liquidity, it signaled potential selective use of Basel Committee “Endgame” standards only where Treasury can validate the rationale and make it available for public comment, a review of the stress capital buffer sizing process to ensure legal consistency and transparency, work on a proposal to address concerns that the enhanced Supplementary Leverage Ratio can become a binding constraint, and a reassessment of the liquidity framework including the role of loans as collateral, the discount window, and the Federal Home Loan Banks. Faulkender said the Secretary has asked each federal banking agency to consider removing reputational risk as a basis for supervisory criticism, and noted bank regulators are developing a proposal related to the enhanced Supplementary Leverage Ratio. Treasury also invited industry input on regulations and supervisory practices that restrain banks’ lending and provision of financial services.
U.S. Department of the Treasury 2025-05-13
U.S. Department of the Treasury outlines bank regulatory reform agenda spanning supervisory culture changes and capital and liquidity modernization
At a U.S. Bancorp meeting, Treasury Deputy Secretary Michael Faulkender outlined priorities for modernizing bank regulation, emphasizing reduced regulatory burden and enhanced financial risk oversight. He highlighted an executive order for regulatory review by the Office of Management and Budget and Treasury's role in harmonizing regulatory approaches. Key points included refining supervisory practices, potential selective use of Basel Committee standards, and reassessing capital and liquidity frameworks.