Daijiworld Media Network - Washington
Washington, Jun 7: Senior US financial regulators appeared before the House Financial Services Committee this week, defending ongoing efforts to recalibrate banking regulations and implement a new legal framework for stablecoins, even as Democratic lawmakers warned that the changes could weaken post-crisis safeguards.
Officials from the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) outlined their priorities for the banking sector, highlighting a broader push to modernise financial oversight while encouraging innovation.
Federal Reserve Vice Chair for Supervision Michelle Bowman told lawmakers that the US banking system remains “sound and resilient,” adding that lending to households and businesses continues to expand. She said regulators had made significant progress in updating supervisory frameworks while maintaining core safety standards.
House Financial Services Committee Chairman French Hill argued that current reforms reflect a return to core regulatory responsibilities focused on financial stability. He said the changes under consideration are intended to support lending, strengthen community banks, and encourage innovation without undermining the banking system.
A key focus of the hearing was the implementation of the GENIUS Act, a newly enacted law establishing a federal regulatory structure for payment stablecoins. Regulators said they are actively working on rules required under the legislation.
FDIC Chairman Travis Hill described implementation as a top priority, while OCC Comptroller Jonathan Gould said the agency is reviewing extensive public feedback on proposed regulations. He also indicated that interest in new bank charters has increased, suggesting renewed momentum in the sector.
The discussion reflects Washington’s broader effort to integrate digital assets into the regulated financial system. NCUA Chairman Kyle Hauptman argued that stablecoins could make payments faster and more efficient while expanding financial inclusion. He also noted that a significant share of dollar-backed stablecoin usage currently occurs outside the United States, suggesting potential global demand benefits for the US dollar.
Regulators also addressed proposed revisions to the Basel III capital framework, which would adjust how banks are required to hold capital against potential risks. Bowman said the revisions aim to better align capital requirements with actual financial risk while supporting lending activity. Republican lawmakers largely supported the adjustments, arguing that earlier proposals could have unnecessarily restricted credit and increased borrowing costs.
However, Democratic lawmakers raised strong objections. Committee Ranking Member Maxine Waters accused the administration of pursuing an aggressive deregulatory agenda that could weaken capital buffers, reduce oversight of large financial institutions, and loosen controls on crypto-related activities.
The hearing also touched on emerging risks related to artificial intelligence, cybersecurity threats, and lessons from past banking failures, including the 2023 collapse of Silicon Valley Bank. Bowman confirmed that an independent review of supervisory lapses connected to the collapse is ongoing, though some former officials have declined to participate in interviews.
The debate underscored a widening policy divide in Washington over how best to balance financial innovation with systemic stability, particularly as digital assets and new technologies reshape the banking landscape.