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Financial Services Law Insights and Observations

Fed vice chair for supervision outlines future priorities

Bank Regulatory Federal Issues Digital Assets Federal Reserve Bank Mergers Fintech Climate-Related Financial Risks CRA Financial Crimes Anti-Money Laundering Of Interest to Non-US Persons Supervision

On September 7, Federal Reserve Board Vice Chair for Supervision Michael Barr laid out his goals for making the financial system safer and fairer during a speech at the Brookings Institution, highlighting priorities related to risk-focused capital frameworks and bank resiliency, mergers and acquisitions, digital assets and stablecoins, climate-related financial risks, innovation, and Community Reinvestment Act modernization plans. Addressing issues related to resolvability, Barr signaled that the Fed would begin “looking at the resolvability of some of the other largest banks [in addition to globally systemically important banks] as they grow and as their significance in the financial system increases.” With respect to bank mergers, Barr commented that “the advantages that firms seek to gain through mergers must be weighed against the risks that mergers can pose to competition, consumers and financial stability.” He said he plans to work with Fed staff to assess how the agency performs merger analysis and whether there are areas for improvement. Barr also discussed financial stability risks posed by new forms of private money created through stablecoins and stressed that Congress should work quickly to enact legislation for bringing stablecoins (especially those intended to serve as a means of payment) within the prudential regulatory perimeter. He added that the Fed plans to make sure that the crypto activity of supervised banks “is subject to the necessary safeguards that protect the safety of the banking system as well as bank customers,” and said “[b]anks engaged in crypto-related activities need to have appropriate measures in place to manage novel risks associated with those activities and to ensure compliance with all relevant laws, including those related to money laundering.” 

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