Progressives ‘cautiously optimistic’ as Barr agenda comes into focus
By Kyle Campbell
Changes are coming to the Federal Reserve’s regulatory and supervision policy, just not the type of sweeping reform some had advocated and others had feared. Last week, Michael Barr gave his first speech since being sworn in as the Fed’s new vice chair for supervision in July. He outlined a different set of priorities from his predecessor, Randal Quarles, but did not deliver the full scale rebuke called for by certain progressive groups at the onset of the Biden administration…Karen Petrou, co-founder and managing partner of Federal Financial Analytics, said she was encouraged by the additional detail Barr provided about his vision for a holistic capital review. He mentioned the concept briefly during his confirmation hearing in front of the Senate Banking Committee earlier this summer. Petrou said last week’s remarks demonstrated Barr’s initial statement was not an “idle promise.” She added that having capital rules that reflect individual bank’s risk exposures would be key to enhancing both safety in the financial system and fairness, one of Barr’s key objectives. “It was not just about having more capital, but asking the question of what is that for and what is it actually doing,” Petrou said. “The holistic part is recognizing that a bigger number does not necessarily mean better capital.”