U.S. Treasury suggests easing Volcker rule, cutting CFPB power

By Pete Schroeder and Lisa Lambert

(Reuters) - The U.S. Treasury Department unveiled a sweeping plan on Monday to upend regulations put in place after the 2008 financial crisis in ways that would reduce the authority of a consumer protection agency and grant Wall Street banks more flexibility in their trading businesses. The highly anticipated, nearly 150-page report suggested more than 100 changes, the vast majority of which can be made by regulators rather than through Congress. President Donald Trump has gradually been nominating heads of financial agencies like the Office of the Comptroller of the Currency and the Securities and Exchange Commission to carry out his agenda.

In a statement, Treasury Secretary Steven Mnuchin said the regulatory overhaul is needed to grow the economy, give consumers more choices and ensure U.S. taxpayers would not have to bail out big banks again. While the Trump administration has said it wants to protect consumers, existing rules limit their access to loans and investment products they want.

Among other things, the Treasury suggests expanding the authority of the Financial Stability Oversight Council, which is chaired by Mnuchin; ease up on the Volcker rule, which restricts banks' ability to place speculative market bets; and reduce the authority of the Consumer Financial Protection Bureau. Those changes have long been sought by Wall Street trade groups, and would benefit big banks like JPMorgan Chase & Co , Bank of America Corp , Citigroup Inc , Wells Fargo & Co , Goldman Sachs Group Inc and Morgan Stanley . The Treasury also suggests providing relief for smaller banks by easing restrictions on those banks that have $50 billion or less in assets.

If the Trump administration succeeds in making changes through regulatory agencies, it can avoid a lengthy and perhaps futile battle with lawmakers. Although the White House and Congress are led by Republicans, Democrats in the Senate can block legislation and are unlikely to support any overhaul that eases rules on big banks. Many changes proposed by the Treasury Department would undo rules put in place by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, a landmark set of post-crisis laws signed by Trump's Democratic predecessor, President Barack Obama. Dodd-Frank required banks to hold more capital and liquidity, implemented annual stress tests and put restrictions around the types of trading and investments they could make. It also set up the CFPB and put other consumer protections in place.

(Reporting by Pete Schroeder and Lisa Lambert in Washington; Writing by Lauren Tara LaCapra; Editing by Diane Craft)