As with almost every issue, more is not always better. There is an optimal middle ground in terms of financial (de)regulation. The relevant questions is: where do we stand in relation to the optimum amount of regulation. The economy is doing well, but is this despite of, independent of, or due to regulation? Indisputably, banks are safer than before the crisis.
Ms. Yellen said regulators also should review restrictions on investment activity by banks, including the so-called Volcker Rule that limits speculative investments.But there are clear limits on how far she thinks the Fed should go.
Randal Quarles, nominated by Mr. Trump last month as the Fed’s vice chairman for supervision, said at his confirmation hearing that there is a need to relax some of the strictures placed on the financial industry since the crisis. He mentioned specifically the Fed’s annual stress testing of large banks.
I don’t understand what argument could exist against the Fed’s annual stress tests. Someone please enlighten me! Does everybody in finance agree that less regulation is better? Where is the optimum? Does everyone agree there needs to be some regulation?
