One Down, Not Out
As we noted, Vice Chair Barr has bowed to the institutional might of the central bank he helps govern, agreeing Friday that the consensus which Chair Powell committed (see Client Report FEDERALRESERVE75) on the capital rules will lead to significant, material changes. This is a major victory for banks who mustered what Mr. Powell and others said is the most omnipresent, potent regulatory-advocacy campaign they’ve ever seen. Still, it leaves open what will change, how Acting Comptroller, and – more problematic – FDIC Chair Gruenberg and Director Chopra will join in. We anticipated this outcome in our January forecast on the future of the capital rule, also laying out just what the concession might look like and what could happen if only the Fed or just the Fed and OCC are able to agree. We will shortly provide clients with an updated forecast of what’s to come along with a look at a question of almost equal importance: when changes will come and if that’s enough time to ensure finalization before the political landscape could take a decided change all its own this November.