Fed officials, banking experts discuss regulatory rewrite effort at conference?

By Pete Schroeder

WASHINGTON (Reuters) - The Federal Reserve continued work on its comprehensive effort to rewrite bank rules with a daylong conference at its headquarters on Tuesday.

At the conference in Washington, regulatory officials, bankers, industry lawyers and other experts discussed a range of tougher bank rules put in place after the 2008 financial crisis, and ways to refine them. The outcome could save large banks billions of dollars in capital costs, which they argue would free them to engage in more lending and other activities, but skeptics warn could make banks less resilient in future shocks.

"We need to ensure that all the different pieces of the capital framework work together effectively. Doing so will help maintain a safe, sound, and efficient banking system, for the benefit of the people we serve," Fed Chair Jerome Powell said in introductory remarks.

The event was pushed by Fed Vice Chair for Supervision Michelle Bowman, who stepped into the U.S. central bank's top regulatory post in June after being nominated for the role by President Donald Trump. Bowman, a member of the Fed's Board of Governors since 2018, has charted an ambitious agenda to reconsider a raft of longstanding bank requirements.

The conference tackled nearly every major bank capital requirement imposed by the Fed and other U.S. bank regulators following the crisis 17 years ago, including leverage requirements, additional surcharges imposed on large global banks, and annual "stress tests" of large bank finances.

Banks have increasingly complained over the years that the rules have become unnecessarily onerous and outdated, which has helped push financial activity out of the traditional banking sector into less heavily regulated non-banks.

"It's really about striking that balance between economic growth and safety and soundness," said Sheara Fredman, chief accounting officer at Goldman Sachs.

Many of those rules are being rewritten by regulators, or officials have discussed potential changes.

The industry garnered a major victory last year when it effectively sidelined an effort to overhaul how banks gauge their risk known as the "Basel III endgame," which would have drastically raised large banks' capital requirements. Banks intensely lobbied against the initiative, which was pushed by Bowman's predecessor, Fed Governor Michael Barr.

On Tuesday, much of the conversation was aimed at how remaining rules could be changed to ease bank burdens, including by advancing a new version of the Basel framework that minimizes the capital impact of new risk measurements.

(Editing by Paul Simao)