Ultimate magazine theme for WordPress.

U.S. bank stocks rise as industry welcomes Powell renomination

NEW YORK, Nov 22 (Reuters) – U.S. bank stocks rose on Monday as senior bankers and industry figures welcomed Federal Reserve Chair Jerome Powell’s nomination by President Joe Biden for a second four-year time period.

A Republican and former non-public fairness lawyer, Powell has lengthy been favored by Wall Street bankers and fund managers who noticed him as one in all their very own, sympathetic to their gripes that the industry has develop into over-regulated as a results of the 2007-2009 monetary disaster.

Biden, in an announcement emailed to reporters, paid tribute to the “decisive action” which the Fed had taken in response to the COVID-19 pandemic. learn extra

Register now for FREE limitless entry to reuters.com

Senior bankers echoed the presidential reward for Powell’s swift and regular hand.

“Chairman Powell has been a steadying force throughout the pandemic and I’m glad to see him continue in this role,” Christiana Riley, chief govt of Deutsche Bank’s (DBKGn.DE) U.S. enterprise, stated.

“Consistency at the top of the Federal Reserve is reassuring during this critical point in the post-pandemic recovery.”

The S&P 500 bank index was up 2.6%, on tempo for its greatest day in two months.

Powell presided over a historic run-up in stocks. The S&P 500 has risen round 70% beneath Powell, fueled partially by extraordinary measures taken throughout the coronavirus pandemic. The Fed added $4.4 trillion to its stability sheet throughout the pandemic, buying belongings together with Treasuries and mortgage-backed securities (MBS). learn extra

Over the previous 4 years, Powell additionally backed a assessment led by Fed vice chair for supervision Randal Quarles of key post-crisis rules, agreeing with Quarles’ view that many have been too blunt and onerous and ought to be higher tailor-made to banks’ dangers.

Among essentially the most contentious modifications have been revisions to the “Volcker Rule” curbing speculative bank investments; scrapping a requirement for giant banks to carry capital in opposition to sure swap trades; and stripping the Fed of its energy to fail banks on their annual “stress tests” primarily based on subjective issues.

Powell’s perceived “bank-friendly” agenda had led Democrat progressives to favor Federal Reserve board member Lael Brainard, who had gained respect from progressives for opposing Quarles’ efforts to ease bank rules.

Brainard has, as a substitute, been appointed vice chair.

One space of lingering concern for banks could be Biden’s failure to announce a brand new regulatory chief to interchange present head of supervision Randal Quarles, who stepped down from his position overseeing the nation’s largest banks in October.

Brainard had been favourite for that position however didn’t need it, based on two folks conversant in the matter. learn extra

Biden stated the supervision put up and different Fed picks can be introduced in early December. learn extra

Some analysts and traders raised concern that Biden may appoint a candidate with an aggressive regulatory agenda to fulfill progressive Democrats sad at Powell’s reappointment. learn extra

“The oversight role is still a risk for the banks. And so that’s something we’re going to pay attention to,” stated Jack Ablin, chief funding officer at Cresset Capital Management in Chicago.

Jaret Seiberg, an analyst at Cowen Washington Research Group, stated the very best end result banks can hope for can be a candidate with an identical agenda to Brainard whereas a politically-motivated appointment might be extra damaging for banks.

“Higher capital requirements and tougher CCAR (stress tests) are inevitable,” Seiberg stated.

Kevin Fromer, CEO of the Financial Services Forum, which represents the biggest eight U.S. banks and their CEOs, congratulated each Powell and Brainard.

“We expect regulators will continue to hold the largest banks to the high regulatory and supervisory standards that have remained in place to support a resilient and essential part of the U.S. financial system.”

Register now for FREE limitless entry to reuters.com
Additional reporting by David Henry and Sinead Carew in New York and by Pete Schroeder in Washington; Editing by Nick Zieminski, Mark Potter and Chizu Nomiyama

A trader wearing a protective face mask walks, as the global outbreak of the coronavirus disease (COVID-19) continues, at the New York Stock Exchange (NYSE) in the financial district of New York, U.S., November 19, 2020. REUTERS/Shannon Stapleton

A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 6, 2021.  REUTERS/Brendan McDermid

Federal Reserve Chair Jerome Powell attends the House Financial Services Committee hearing on Capitol Hill in Washington, U.S., September 30, 2021. Al Drago/Pool via REUTERS

Comments are closed.