US regulatory outlook: The beginning of the end

July 2014


Regulatory delay is now the established norm, which continues to leave banks unsure about how to prepare for pending rulemakings and execute on strategic initiatives. With the “Too Big To Fail” (TBTF) debate about to hit the headlines again when the Government Accountability Office releases its long-awaited TBTF report, the rhetoric calling for the completion of these outstanding rules will once more sharpen.

This rhetoric should not be confused with reality, however. At about this time last summer, Treasury Secretary Lew stated that TBTF would be addressed by the end of 2013 – a goal that resulted in heightened stress testing expectations and a vague final Volcker Rule in December, but little more. Since then, the slow progress has continued, with only two key rulemakings completed so far this year: the finalization of Enhanced Prudential Standards for large bank holding companies (BHCs) and a heightened supplementary leverage ratio for the eight largest BHCs (i.e., US G-SIBs).

In sum, four years since Dodd-Frank’s passage, there are more regulations to come as we pass the midpoint of the evolving regulatory framework. The Federal Reserve (Fed) during Janet Yellen’s first year as Chair continues to indicate the need for more regulation, and now seems eager to fully involve the entire Fed Board with its kick-off of a series of staff briefings to Fed governors on supervisory issues this past May.

When the dust settles and the rules are finally known, the cumulative impact of all these siloed regulatory actions will have to be determined and strategically addressed. Until then, this A closer look provides our view of which regulations will be issued next and what they will look like.

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Dan Ryan
US Banking and Capital Markets Leader
Tel: +1 (646) 471 8488

Alison Gilmore
US Asset and Wealth Management Marketing Leader
Tel: +1 (646) 471 0588

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