The Senate Banking Committee took a decidedly different tack than yesterday’s confrontational FinServ session (see Client Report FEDERALRESERVE23).  Chairman Shelby (R-AL) was highly critical of FRB monetary policy, but focused in particular on transparency instead of pressing for a rules-based approach.  The chairman also suggested that U.S. banking would be better off with fewer big banks, leading the FRB chair to argue for regulation by “systemic footprint” by way of a capital surcharge.  As previously noted, the FRB will finalize this rule on Monday (see FSM Report GSIB2); we expect a very stringent surcharge coupled with a new link to CCAR.


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