FDIC chairman warns: Cutting bank regulation could be 'costly'

the Financial Times reported that the outgoing chairman of the US Federal Deposit Insurance Corporation (FDIC) warned that if the Trump administration cuts bank regulations too aggressively, the US financial system may pay a "high price". Martin Gruenberg said: "Short-term changes aimed at achieving short-term results in the financial sector may have real costs and, in a sense, undermine our long-term goals." At the same time as he issued the warning, President-elect Trump pledged to cut rules and bureaucratic style as part of his plan to boost the US economy, and his allies expressed interest in streamlining US financial regulatory agencies. Gruenberg said that the US is still vulnerable to the same combination of problems that caused recent major crises, including the savings and loan collapse of the 1980s, the financial crisis of 2008, and the regional bank run of 2023. In each case, relaxing regulation and oversight allowed new products and non-bank financial companies to grow rapidly, which later proved to be more risky than expected. He said: "One thing is important, and that is history will repeat itself. I am concerned that we will have to pay a painful price again."