OLYMPIA FIELDS, Ill. (Reuters) - Chicago Federal Reserve President Charles Evans on Friday defended the sweeping Wall Street reforms that U.S. President Donald Trump wants to rethink, saying they are helping protect against a new financial crisis.
“I think that many of the things that we’ve been able to achieve have been extremely helpful for better ensuring financial stability,” Evans told reporters after a fundraiser for Prairie State College in Olympia Fields, Ill. “I think the more and better capital of the banking industry has been extremely useful.”
Trump on Friday plans to order a review of the Dodd-Frank Wall Street reforms, with an eye to rolling back regulations he sees as slowing the economy. Fed Chair Janet Yellen has resisted any weakening of the bank rules, though she has also said that some changes could be made to reduce the regulatory burden on small banks.
Evans also pushed back against changes that could undermine consumer protections. Trump plans on Friday to ask the Labor Department to determine if a rule requiring brokers to act in their clients’ best interest should be revised or scrapped altogether.
“I think it’s very important that consumers be afforded the appropriate protection, things like investment advice,” Evans said.
He recounted how his 88-year-old mother-in-law called him after a visit to her bank where she was informed about “some kind of product, she calls me, and I go, ‘oh for God’s sakes, why is that being put in front of her?'”
Dodd-Frank is a big package of rules and it should not be surprising that some adjustments need to be made, Evans said.
”I think smoothing out a bit of the regulatory burden, so that it’s balanced with the risks, so we can make some smart adjustments, like I say, I think that the Fed and other agencies have been working to do that,” he said.
But some rules can’t be nixed, he added. “While I’d like to think that everybody is just an upstanding law-abiding person, there’s a lot of nefarious activity and potentially terrorist activity.”
On the monetary policy front, Evans said he “could be comfortable” with three rate hikes this year, given the strength of the labor market and his optimism on inflation.
But he also stuck to his call for slow rate hikes, calling Trump’s plans for fiscal stimulus a “good thing” for the economy but noting the need for stronger growth as a buffer against a future downturn.
Reporting by Ann Saphir; Editing by Chizu Nomiyama