FDIC Chair Jelena McWilliams discussed the Volcker Rule, the Economic Growth, Regulatory Relief and Consumer Protection Act ("EGRRCPA"), FinTech products and international coordination.
In remarks at the Institute of International Bankers Annual Washington Conference, Ms. McWilliams said there is broad consensus on the need to make changes to the Volcker Rule. According to Ms. McWilliams, a revised rule should provide more certainty to regulated entities, and clarify how the FDIC defines the types of trading that are prohibited and the kinds of funds that are within the scope of the rule. Further, Ms. McWilliams stressed that the rule should be "appropriately tailored" so that its requirements are proportional to the size and scope of an institution. On foreign funds in particular, Ms. McWilliams said, the current regulations are "overly complex and, frankly, impractical to implement." The FDIC "will consider the options available for funds in non-U.S. jurisdictions and the operational burdens under the existing rule's requirements."
Banking agencies recently proposed to implement the EGRRCPA by tailoring the application of regulatory capital and liquidity requirements for domestic banks in light of their sizes and risk profiles, among other things. She described the proposal as "thoughtful" and "something that we should continue to explore for banks" of varying sizes and risk profiles.
Separately, Ms. McWilliams expressed concern with respect to the risks of new FinTech products, saying that they could present new risks for consumers. However, she lauded the forthcoming FDIC Tech Lab, and noted that it is intended to help with the deployment of new technology in the banking industry.
On the issue of international coordination, Ms. McWilliams stated that, in light of the "interconnectedness of the global financial system," it is critical to build strong relationships with international counterparts and not to work at "cross-purposes."
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