Outgoing FDIC Chair Warns Against Aggressive Deregulation

According to Odaily, the outgoing chairman of the U.S. Federal Deposit Insurance Corporation (FDIC), Martin Gruenberg, has cautioned that aggressive deregulation of banks by the Trump administration could lead to significant costs for the American financial system. Gruenberg emphasized that short-term changes aimed at achieving immediate results in the financial sector might incur real costs and undermine long-term objectives. His warning comes as President-elect Trump has pledged to cut regulations and bureaucracy as part of his plan to boost the U.S. economy, with his allies showing interest in streamlining American financial regulatory bodies. Gruenberg highlighted that the U.S. remains vulnerable to the same combination of issues that led to recent major crises, including the savings and loan collapse of the 1980s, the 2008 financial crisis, and the regional bank runs of 2023. In each instance, deregulation and reduced oversight facilitated the rapid growth of new products and non-bank financial companies, which later proved riskier than anticipated. He stressed the importance of learning from history to avoid repeating past mistakes, expressing concern that the nation might have to pay a heavy price once again. In related news, FDIC interim chairman Travis Hill recently acknowledged in a speech that the agency had engaged in 'de-banking' of cryptocurrency companies. He noted that some crypto-related businesses lost banking services without explanation, describing this practice as 'unacceptable.'