Capture
Mistakes in regulation cascade in unpredictable ways.
In fairness, private credit’s growth is an artefact of the post-Financial Crisis overregulation of the banking sector.
But I digress.
‘Boston Fed spots $1.7T private credit bubble with CDO-like characteristics. Kevin Warsh's solution? Shrink Fed oversight. The regulatory capture writes itself.’
Trump administration prepares to ease big bank rules
Cue the bidding up of Treasuries once this goes through. Or in anticipation of it.
Come to think of it, if people are buying Treasuries in anticipation of this particular deregulatory initiative and they’re not going up, then, hey, wait a minute …
‘Trump-appointed regulators are nearing completion of a proposal that would relax rules on how much of a capital cushion the nation’s largest banks must have to absorb potential losses and remain solvent during periods of economic stress.’
Stablecoin Regulation Could Shakeup US Financial System
Adapt or die.
‘US Treasury Secretary Scott Bessent has an even grander vision: that stablecoins will strengthen the dollar’s status as “the dominant reserve currency in the world,” a concept that’s been called into question in recent months. Bessent and his team say they are also looking into how they can help the government finance its gaping deficit. Not all economists are quite so bullish though.’
Top Federal Reserve official promises major overhaul of US bank regulation
In response to the financial crisis, we went ape-crazy with bank regulations.
Talk to enough market professionals and you’ll begin to understand how many times over the ensuing years came this close to breaking the global financial system’s plumbing. Not much of which was reported.
We also decided to look the other way by pushing activities that caused the last crisis into far less regulated entities.
New Fed Vice Char Michelle Bowman will get to the bottom of it. She assures us she will.
Allrighty then.
‘Bowman, who has long been critical of stricter capital rules, said the regulations introduced after the financial crisis have been “pushing foundational banking activities out of the regulated banking system into the less regulated corners of the financial system”. “With well over a decade of change in the banking system now behind us post-implementation, it is time to evaluate whether all of these changes continue to be relevant,” she said.’
Regulation vs. Innovation: The Tug-of-War Defining Finance’s Future
Sometimes, it seems that the point of regulation is to punish the compliant in favor of the non-compliant.
At any rate, all of this regulatory inconsistency favors the large and punishes the small. The big boys can figure out a way to navigate the minefield.
‘Financial services companies are caught between rapidly evolving AI regulations that vary dramatically by jurisdiction, creating compliance nightmares that can stifle innovation. While the EU’s AI Act imposes fines up to €35 million for noncompliance, the US takes a growth-focused approach and Asian markets implement their own transparency requirements. B2PRIME Group’s Alex Tsepaev identifies a critical paradox: while many compliance teams resist AI modernization due to regulatory uncertainty, they’re simultaneously hampering their firms’ ability to compete in an AI-driven market.’