Europe Is Counting on Trump to Stand by Global Bank Regulations

(Bloomberg) -- The European Union’s financial-services policy chief used a visit to Washington to renew his call for President Donald Trump to maintain the U.S. commitment to global financial rules put in place since the crisis.

The U.S. and EU have worked together in the Group of 20 to “develop a common international financial governance to build global resilience,” Valdis Dombrovskis, a vice president of the European Commission, said in a speech at the American Enterprise Institute on Thursday. “Without working jointly, we would run the risk of regulatory arbitrage and renewed instability.”

The EU is working to fine-tune regulations to make them more “growth-friendly,” but the bloc is “not willing to lower prudential standards,” Dombrovskis said. “We count on the U.S. to stand by the same principle.” He made a similar appeal to Trump in February.

The Trump administration has instructed U.S. regulators to produce a study on financial rules as a first step toward unwinding safeguards put in place by Barack Obama. Regulations that Trump plans to target include a ban on proprietary trading, a requirement that risky financial companies be subject to tough Federal Reserve oversight and rules for winding down failed banks.

Dombrovskis pointed to three areas where international cooperation is particularly crucial: derivatives markets, bank capital charges and crisis management.

To handle the collapse of a major international bank, “both EU and U.S. laws need crisis management tools which are compatible with each other,” he said. “We are following very closely discussions on a possible modification to the Title II of Dodd Frank on the orderly liquidation authority. We hope the need for effective cooperation will be taken into account in these discussions.”

To contact the reporter on this story: Patrick Henry in London at phenry8@bloomberg.net.

To contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Boris Groendahl