Conference Presentation, Panel, Fireside Chat
Global Financial Regulation
Milken InstituteJared Seberg, James Barth, Bob Corker, Gary Lathrop, Kevin Lynch, Tom Pirelli, Bruce Brown, Chris Cole, Michael D.
- Event logistics are projected to be fast-paced with brief introductions and speeches to maintain a lively, interactive session.
- Congressional action is expected to avoid arbitrary size limits or artificial elements, favoring methodical analysis of the social mission of large institutions while reflecting a sentiment supportive of community banks.
- Future regulatory frameworks, specifically Basel III and capital requirements, face risks of excessive height, potentially leading to higher loan rates, reduced credit availability, and squeezed economic growth.
- High capital costs and restrictive regulations are predicted to drive a shift of lending activity, securitization markets, and clients toward the shadow banking sector, which is currently estimated at just under $70 trillion globally and exceeds the size of the regulated banking sector.
- Fragmentation in the global regulatory landscape and divergent views on banking structure between the U.S., U.K., and Europe are expected to increase systemic complexity rather than reduce it.
- Specific regulatory concerns include the opacity of enforcement, the questionable efficacy of the Dodd-Frank Act's orderly liquidation authority due to political elements, and the "unbelievable" risk weighting on OECD sovereign debt requiring Basel III changes.
- The implementation of financial transaction taxes is anticipated to severely impact market liquidity, squeeze growth, and be counter-productive to job and economic expansion.
- A moratorium on non-financial firms owning FDIC-insured banks is expected to continue, keeping the U.S. out of step with other countries and stifling innovation compared to industrial loan corporation models.
- Regulatory ambiguity regarding OTC derivatives clearing may result in two parallel clearing systems between the EU and U.S., while the end-user exemption for collateral posting is facing increased ambivalence due to system flaws.
- Experts predict an unforeseen future crisis will force society to choose between allowing an institution to fail or absorbing the cost of its resolution.
- Accountability for regulatory authorities is expected to be demanded, citing their "miserable" performance during the previous crisis, alongside risks associated with unstable fiscal positions creating a "mutuality of interest" between governments and banking systems.