The Impact of Post-Crisis Reforms on the U.S. Financial System and Economy
Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
to the
Exchequer Club
Washington, D.C.
June 15, 2016
Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
to the
Exchequer Club
Washington, D.C.
June 15, 2016
1
Thank you for the opportunity once again to speak to the Exchequer Club.
Today I would like to share some thoughts on the broader effects on the U.S. financial
system and economy of the prudential safety and soundness reforms that the regulators have
implemented since the financial crisis.
In response to vulnerabilities identified during the crisis, regulators have undertaken a
series of measures to strengthen the banking system of the United States and promote a more
stable and resilient financial system. The federal banking agencies have strengthened the quality
of regulatory capital and increased the level of risk-based capital requirements for all banks, and
have established enhanced leverage ratio requirements for the largest, most complex banking
organizations. The banking agencies also have finalized requirements for increased liquid asset
holdings of large banking organizations, proposed liquidity rules addressing the need for longer-
term stable sources of funding, and worked with other agencies to establish margin requirements
for non-cleared derivatives and limit the use of the federal banking safety net to support
proprietary trading. The Federal Reserve’s CCAR stress test process1 has significantly increased
the focus on rigorous management of the risks at large banking organizations.
As an objective matter, the banking system is significantly more resilient today as a result
of these reforms. At the end of 2015, large banking organizations2 had twice as much tier 1
capital and liquid assets in proportion to their size as they had entering the crisis,3 and the loss-
1 Comprehensive Capital Analysis and Review.
2 Bank Holding Companies with assets of at least $250 billion.
3 The tier 1 leverage ratio for BHCs with assets of at least $250 billion increased from 4.46 percent at year-end
2007 to 9.04 percent at year-end 2015, while the ratio of liquid assets (for this purpose these consist of cash, Fed
Funds sold, Treasury securities, Agency debt securities, and Agency mortgage-backed securities) to total assets
increased from less than 10 percent to about 21 percent during the same period.
Thank you for the opportunity once again to speak to the Exchequer Club.
Today I would like to share some thoughts on the broader effects on the U.S. financial
system and economy of the prudential safety and soundness reforms that the regulators have
implemented since the financial crisis.
In response to vulnerabilities identified during the crisis, regulators have undertaken a
series of measures to strengthen the banking system of the United States and promote a more
stable and resilient financial system. The federal banking agencies have strengthened the quality
of regulatory capital and increased the level of risk-based capital requirements for all banks, and
have established enhanced leverage ratio requirements for the largest, most complex banking
organizations. The banking agencies also have finalized requirements for increased liquid asset
holdings of large banking organizations, proposed liquidity rules addressing the need for longer-
term stable sources of funding, and worked with other agencies to establish margin requirements
for non-cleared derivatives and limit the use of the federal banking safety net to support
proprietary trading. The Federal Reserve’s CCAR stress test process1 has significantly increased
the focus on rigorous management of the risks at large banking organizations.
As an objective matter, the banking system is significantly more resilient today as a result
of these reforms. At the end of 2015, large banking organizations2 had twice as much tier 1
capital and liquid assets in proportion to their size as they had entering the crisis,3 and the loss-
1 Comprehensive Capital Analysis and Review.
2 Bank Holding Companies with assets of at least $250 billion.
3 The tier 1 leverage ratio for BHCs with assets of at least $250 billion increased from 4.46 percent at year-end
2007 to 9.04 percent at year-end 2015, while the ratio of liquid assets (for this purpose these consist of cash, Fed
Funds sold, Treasury securities, Agency debt securities, and Agency mortgage-backed securities) to total assets
increased from less than 10 percent to about 21 percent during the same period.