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Big banks pushing for relief on rules, oversight

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Administration officials sound sympathetic to lighter

touch

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Bank supervision, reporting requirements, stress tests in

focus

By Lananh Nguyen, Pete Schroeder and Tatiana Bautzer

NEW YORK, March 27 (Reuters) - U.S. banking giants are

pushing for a swath of lighter regulations from President Donald

Trump's administration, and say they are heartened by signals

that regulators are listening.

Bank bosses want to cut reporting requirements on some

transactions, limit regulators' enforcement powers, speed up

deal approvals and overhaul capital rules, four industry

executives told Reuters. Those asks would include raising the

bar on an anti-money-laundering rule requiring reporting of

$10,000 cash transactions and limiting the use of confidential

regulatory warnings, known as Matters Requiring Attention, two

of those sources said. Another major change could be watering

down annual stress tests, one of those sources said.

The industry has gotten encouraging signs from public

statements from the administration, even as bankers wait for

head regulators to be installed.

"There has been receptivity to our concerns," said Kevin

Fromer, head of the Financial Services Forum, which represents

the largest global banks and has been pushing for lighter

capital and supervisory controls. "We're at the early stages of

that conversation."

Public statements by regulators have indicated a change of

focus. Treasury Secretary Scott Bessent told the Economic Club

of New York this month that the financial regulatory agenda

needed "a fundamental refocusing of supervisors' priorities,"

while Travis Hill, acting FDIC head, said at a bankers

conference in Washington that regulators need to be "more

focused on the real fundamental financial risks and less on the

administration around that."

REGULATORY CHANGE

The changes being pushed could amount to some of the

most significant bank deregulation in years. Most recently, some

larger banks saw rule relief in 2019 under a "tailoring" project

undertaken in the first Trump administration.

The wishlist for sweeping regulatory changes comes after the

industry fought Biden-era regulators who sought to implement

stricter capital rules known as Basel endgame last year. The

proposal was effectively scrapped in a major victory for banks,

and now the industry is seeking further relief.

Some bankers contend that regulators in recent years have

been unfairly heavy-handed even as large institutions report

robust earnings and show resilience through the pandemic and

2023 industry turmoil, when three regional lenders failed.

Still, proponents of tougher rules argue they provide

critical guardrails for the financial system, protecting

consumers and the broader economy.

"Financial rules protect Main Street families while

weakening them enrich Wall Street bankers," said Dennis

Kelleher, head of the advocacy group Better Markets, which

pushes for stricter financial rules.

Treasury spokespeople did not respond to a request for

comment.

Spokespeople for agencies that supervise banks - the

Federal Deposit Insurance Corporation, and Federal Reserve -

declined to comment. The White House did not respond to a

request for comment.

SUPERVISION, ENFORCEMENT

Bank bosses have a broader, ambitious goal to water down

supervision and enforcement, three of the sources said. The

industry seeks to rein in regulators' focus to material

financial risks that can be quantified.

Banks have complained for years that examiners expanded

scrutiny far beyond core financial matters and into areas such

as corporate governance, computer systems and compensation,

according to the Bank Policy Institute, a trade association

representing large U.S. lenders.

Industry leaders aim to water down MRAs handed down by

regulators such as the Federal Reserve and the Office of the

Comptroller of the Currency (OCC), three sources said. Lenders

treat MRAs as urgent matters, devoting many employees to repair

work to avoid fines or other punishments.

BPI said some MRAs represented "illegal overreach" by

regulators, who should concentrate on material risks to banks'

financial condition.

Bessent echoed that concern in his New York speech, calling

on agencies to "drive a culture that focuses on material

financial risk rather than box checking."

Lenders are also pushing for a broad overhaul of the Fed's

so-called stress tests, an annual exercise aimed to measure

banks' abilities to handle potential crises. The Fed signaled

late last year it was open to changes to make the exam more

transparent. BPI led a lawsuit against the Fed late last year

demanding such changes.

'OUTDATED' CASH RULE

One of the easiest regulations to adjust could be an

anti-money laundering (AML) rule requiring banks to file reports

on customers who make more than $10,000 in cash transactions in

a day, according to one of the sources, an industry executive

who declined to be identified discussing supervisory matters.

That would require rewriting a rule within The Treasury

Department.

AML has been cited by lobby groups as contributing to

'debanking', or when a bank closes an individual's account.

President Donald Trump publicly complained of 'debanking' of

conservatives earlier this year.

"The requirements that we have ... under the anti

money-laundering laws and the various sanctions regimes, the

general laws globally are quite onerous," said Kathryn Ruemmler,

Chief Legal Officer and General Counsel of Goldman Sachs ( GS )

at a conference this month.

The industry has long complained that the limit is

outdated and generates unnecessary filings. It would welcome a

higher threshold such as $75,000 or even $100,000, the source

said.

One leading bank regulator has endorsed the idea. Rodney

Hood, the acting head of the Office of the Comptroller of the

Currency, which monitors national banks, said in a statement to

Reuters that the current limit is "outdated and burdensome," and

backed an increase among other rule easings.

Congress is set to question Jonathan Gould, Trump's pick to

permanently lead the OCC, on Thursday.