Fed's Quarles says regulators looking closely at ways to change bank rules

Randal Quarles
Chris Kleponis | Bloomberg | Getty Images
Randal Quarles
  • A proposal to loosen restrictions on bank trading activities is just the beginning of efforts to roll back the crisis-era regulation that overhauled Wall Street.
  • "There are a variety of ways we can make that regulation achieve its objective in a more efficient way," Fed vice chairman for bank supervision Randal Quarles told CNBC.

Randal Quarles, the Federal Reserve's vice chairman for bank supervision, said Thursday that the proposal to loosen restrictions on bank trading activities is just the beginning of efforts to roll back the crisis-era regulation that overhauled Wall Street.

"We have had many years of experience with this body of post crisis regulation," he told CNBC's Steve Liesman on Thursday during "Power Lu nch," referring to the 2010 Dodd-Frank regulations put in place in response to the financial crisis. "There are a variety of ways we can make that regulation achieve its objective in a more efficient way."

Randal Quarles, vice chairman of supervision at the Federal Reserve, speaks during a meeting with the Board of Governors for the Federal Reserve in Washington, D.C., on Wednesday, May 30, 2018.
Aaron P. Bernstein | Bloomberg | Getty Images
Randal Quarles, vice chairman of supervision at the Federal Reserve, speaks during a meeting with the Board of Governors for the Federal Reserve in Washington, D.C., on Wednesday, May 30, 2018.

He added, "We're looking closely at where we can do that."

On Wednesday the Fed and other regulators released a proposal to loosen restrictions on bank trading activity. The so-called Volcker Rule aimed to curtain risk taking, but the banking industry has long railed against the restrictions.

"The changes that we've proposed we think will significantly reduce the burden without undermining the objective," Quarles said Thursday.

The rule went into effect four years ago and prevented banks from trading for their own profit or investing in hedge funds and private equity funds. The new proposal would allow banks to trade for themselves on a limited basis and would allow stakes in funds in order to hedge customer risks. It also applies the strictest rules on banks with big trading businesses and lifts them for banks that don't do much trading at all.