At Tokyo forum, Fed supervisory leader again calls for reassessing financial reg reform

Repeating a past call to reassess financial regulation reform in the wake of the financial crisis 10 years ago, the Federal Reserve’s top supervisory leader told a Tokyo audience Thursday that now is an “eminently natural and expected time to step back and assess those efforts.”

Randal Quarles, Federal Reserve vice chairman for supervision, told the 26th International Financial Symposium of the Institute for International Monetary Affairs in Tokyo, Japan, that the Federal Reserve and other federal financial regulatory agencies have spent “the better part” of the past decade building out and standing up the post-crisis regulatory regime.

“As such, now is an eminently natural and expected time to step back and assess those efforts,” Quarles said. “It is our responsibility to ensure that they are working as intended, and — given the breadth and complexity of this new body of regulation — it is inevitable that we will be able to improve them, especially with the benefit of experience and hindsight.”

In a speech in Washington last month, Quarles said “clear improvements” to the Federal Reserve’s supervision program are “in the offing” in the near future, even though core regulatory reform in response to the financial crisis produced a stronger and more resilient system and should be preserved.

The Fed vice chairman referred to regulatory reform only as the very last words of his address. The bulk of his remarks focused on the U.S. economy and monetary policy. He told the group that the U.S. economy appears to be performing very well. Certainly, he said, it “is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis.”

He called recent volatility in equity markets a reminder that asset prices can move rapidly and unexpectedly. “However, it is my assessment that the underlying fundamentals of the U.S. economy are sound and much improved relative to earlier in the decade,” he said.

Speech by Vice Chairman Quarles on the U.S. economy after the global financial crisis