(Bloomberg) -- Federal Reserve Governor Stephen Miran wants to see the agency rework a raft of Wall Street regulations before policymakers delve into other economic questions around the central bank's balance sheet.
"For many years, financial regulation mostly moved in one direction, increasingly restricting the banking sector," Miran said Wednesday in prepared remarks for the Bank Policy Institute, a Washington-based trade group. He added that interactions of regulation with financial markets, the economy and monetary policy implementation are too often unappreciated.
"While discussions about bank reserve balances and interest paid on reserves, the composition of the balance sheet, and Treasury market intermediation are flourishing, I believe that many of these conversations are downstream of the bank regulatory framework," he said.
Trump-era officials have looked at softening several bank capital measures established in the wake of the 2008 financial crisis, including the so-called enhanced supplementary leverage ratio. The Fed also recently finalized changes to its supervisory rating framework for large banks, easing the requirements for certain lenders.
Miran emphasized that regulators should resist the urge to overreact and that rules went too far after the 2008 financial crisis. He added that this has caused many traditional banking activities to migrate away from the regulated sector in part because of "burdensome rules."
"While I have no bias against nonbank financial companies, credit allocation should be driven by market forces, not regulatory arbitrage," he said.
Miran also said the Fed should strive for more transparency, which the public and the industry would benefit from.
More stories like this are available on bloomberg.com
