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## Federal Reserve Chair Jerome Powell Testifies on Controversial Banking Rule

Federal Reserve chair Jerome Powell recently testified in front of lawmakers over the past two days, addressing concerns about a new controversial rule that mandates big banks to hold greater buffers against future losses. Powell’s testimony, accompanied by FDIC Chair Martin Gruenberg, shed light on the potential changes anticipated for the rule following feedback from various stakeholders, including lenders, community groups, Republicans, and Democrats.

## Powell and Gruenberg’s Stance on Regulatory Changes

During the hearings, Powell emphasized the likelihood of “material and broad changes” to the rule and expressed a willingness to re-propose it if necessary, echoing a similar sentiment shared with House lawmakers. Gruenberg also echoed this sentiment, stating that adjustments to the final rule are expected based on the extensive feedback received.

## Banking Industry’s Reaction and Regulatory Influence

The banking industry’s concerns about the capital rule, touted as the most aggressive regulatory change since the 2008 financial crisis, encompass potential adverse effects on the US economy and reduced access to mortgages for underserved homebuyers. The regulators’ openness to revising the proposed rule signals the significant influence wielded by big banks in Washington, contrasting the rigorous scrutiny they faced post-2008 financial crisis.

## Future Outlook and Regulatory Evolution

Analysts like Ebrahim Poonawala foresee a pivotal juncture in regulatory evolution, where the onus on the largest banks post-2008 crisis might reach a peak. This perspective underscores the shifting regulatory dynamics and emphasizes the importance of adaptable and responsive regulatory frameworks to foster a resilient and equitable financial ecosystem.

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