The Fed has refined regulatory standards over time at the direction of Congress, and through the “tailoring” regulations I discussed earlier that are designed to better align regulation with risk. 7 Even with the implementation of these changes, banks today are better capitalized, with more liquidity, and are subject to a new range of supervisory tools that did not exist prior to 2008.
This banking system is not only strong today but is well prepared to continue supporting the provision of credit and the broader economy. Radical reform of the bank regulatory framework—as opposed to targeted changes to address identified root causes of banking system stress—is incompatible with the fundamental strength of the banking system.