U.S. Board of Governors of the Federal Reserve System Vice Chairman for Supervision Randal Quarles testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs regarding the Federal Reserve Board’s regulation and supervision of financial institutions.  Vice Chairman Quarles submitted identical remarks to the U.S. House Financial Services Committee two days earlier on April 17, 2018.  Vice Chairman Quarles noted the progress that has been made in improving the safety and soundness of the financial system, especially with respect to the largest and most systemically important firms.  Vice Chairman Quarles discussed that the Federal Reserve Board continues to stress the importance of robust risk-management practices, and the role that the Federal Reserve Board plays in the responsible development of technological innovations in the financial industry.  With respect to the Federal Reserve Board’s regulatory and supervisory agenda, Vice Chairman Quarles stressed that safety, soundness and efficiency are not mutually exclusive concepts.  Vice Chairman Quarles discussed the regulatory initiatives already completed or underway to improve regulatory efficiency, such as the proposed recalibration of the enhanced supplementary leverage ratio, but also noted that further improvements can be made with respect to the living will and application processes.  Vice Chairman Quarles also reiterated the need for transparency in Federal Reserve Board supervision and regulation, explaining that the Federal Reserve Board is in the process of developing a revised framework for determining control under the Bank Holding Company Act that is more transparent and easier to understand and apply.  Vice Chairman Quarles discussed that a third goal of the Federal Reserve Board is increased simplicity, referencing the recent stress capital buffer rulemaking, as well as the need to tailor the implementation of the Volcker Rule and further reduce the regulatory burden on smaller community banks.  Vice Chairman Quarles concluded his remarks by summarizing the Federal Reserve Board’s engagement with international regulatory bodies, explaining that this engagement promotes global financial stability and consistent regulation among U.S. financial institutions and their international peers.

View full text of Vice Chairman Quarles’s remarks.