FDIC chairman warns: Cutting bank regulation could be costly

The outgoing chairman of the Federal Deposit Insurance Corporation (FDIC) has warned that the U.S. financial system could pay a "high price" if the Trump administration cuts regulations on banks too aggressively. "Short-term changes aimed at achieving short-term results in the financial sector could have real costs and in some ways undermine our long-term goals," said Martin Gruenberg. His warning comes as President-elect Trump has vowed to cut rules and bureaucracy as part of a plan to boost the U.S. economy and as his allies have expressed interest in streamlining U.S. financial regulators. Gruenberg said the United States remains vulnerable to the same combination of problems that led to major recent crises, including the savings and loan collapse of the 1980s, the financial crisis of 2008 and the regional bank runs of 2023. In each case, deregulation and deregulation enabled the rapid growth of new products and non-bank financial companies that later proved to be riskier than expected. He said: "It is important to note that history will repeat itself. I am afraid that we will have to pay a heavy price again." (Jinshi) Earlier, FDIC interim chairman Travis Hill recently admitted in a speech that the agency had "de-banked" cryptocurrency companies. He pointed out that some crypto-related companies had lost banking services without any explanation and called this practice "unacceptable".