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Federal Deposit Insurance Corp. Chairman Jelena McWilliams said Wednesday that she is zeroing in on “simplifying and rationalizing” a key piece of financial policy as part of a broader push from the agency to reduce uncertainty in the banking industry, MorningConsult.com reported. As part of that effort, the FDIC hopes to finalize clear guidance on the proprietary trading ban under the Volcker rule “sometime this summer,” McWilliams said. An attempted revision on the proprietary trading ban drew criticism from Wall Street last year as bankers complained that the new version would likely include a wider range of activities than the previous one. Five agencies, including the FDIC, will need to approve the changes. The proprietary trading ban guidelines are part of a wider move from McWilliams and the FDIC to clarify parts of financial policy they say has hampered financial activity and innovation. In the coming months, the FDIC will issue a number of other guidelines on how banks, particularly the nation’s smallest financial institutions, can comply with the Volcker rule, McWilliams said.

The steady drumbeat of warnings over the surge in risky corporate borrowing is growing louder and louder as regulators in the U.S. and Europe point to the hazards of businesses taking on too much debt, Bloomberg News reported. At issue is the $1.3 trillion leveraged lending market, composed of high-yield loans from firms with some of the weakest finances. While Federal Reserve and European Central Bank officials have drawn attention to these heavily indebted companies and the deteriorating standards of loans bundled into securities called CLOs, most regulators are careful to say a repeat of 2008 is unlikely because investors, rather than the banks they oversee, hold most of the debt. Yet that’s created a new, and potentially more dangerous, kind of risk. Precisely because roughly 85 percent of leveraged loans are held by non-banks, regulators are largely in the dark when it comes to pinpointing where the risks lie and how they’ll ripple through the financial system when the economy turns. More and more, critics are questioning whether regulators like the Fed have a handle on the problem or the right tools to contain the fallout. A big worry is highly indebted businesses employing thousands could face severe financial stress and, in some cases, insolvency, deepening the next downturn. “I always remind myself that even the smartest policy maker with the most far-reaching perspective, data and tools was basically blind-sided by the breadth and depth of the housing crisis,” said Mark Spindel, chief investment officer at Potomac River Capital. “Leveraged loans and corporate debt are not housing, but maybe it’s more pervasive than we think. We can’t take any of the CLO, leveraged loan, or private debt growth for granted.”

Trump-appointed regulators came into office saying they would pare back Wall Street’s postcrisis rulebook. More than two years into the administration’s tenure, most of the work remains unfinished, particularly for the biggest banks, the Wall Street Journal reported. That worries financial firms and some Republican lawmakers, who fear the window for a regulatory rollback could be narrow, especially if Democrats notch pivotal electoral victories in 2020. Sen. Jerry Moran (R-Kan.) and a group of other Republican senators are urging regulators to move more quickly. The goal: lock in as many changes as possible by year’s end. Sen. Mike Rounds (R-S.D.), who met privately in March with top bank regulators along with other Republican senators, said that he wanted to see more progress on a regulatory overhaul signed into law last year. “The bill can’t work unless it’s implemented,” said Rounds, who, like Moran, sits on the Senate Banking Committee. The rollback efforts combine those required under last year’s law and those that can be put into place by the regulators on their own. Democrats and critics of the changes say that the initiatives already underway go too far, could undermine the financial system and aren’t warranted when banks are posting record profits. Daniel Tarullo, the Fed’s regulatory point-person during the Obama administration, in May said post-crisis rules “could be endangered by a kind of low-intensity deregulation consisting of an accumulation of non-headline-grabbing changes and an opaque relaxation of supervisory rigor.” Under the law passed a year ago, regulators face a fall deadline to simplify rules for midsize and small banks. They also want to make progress by year’s end to retool rules that limit speculative trading by large firms and test the ability of firms such as J.P. Morgan Chase & Co. or Goldman Sachs Group Inc. to continue lending during a severe recession.

Stockbrokers will have to divulge their potential conflicts of interest to clients when they give them investment advice under action taken yesterday by federal regulators, the Washington Post reported. The regulation adopted by the Securities and Exchange Commission will also require brokerages to eliminate sales contests and quotas that reward brokers who generate the highest sales of certain investment products. Still, critics say that the SEC’s new measure, which the financial industry supports, doesn’t go far enough to protect investors from abuses. They say that a stricter standard that advanced under the Obama administration should apply to brokers. This standard, called a “fiduciary duty rule,” required all financial professionals, including brokers, to act as trustees who must put their clients’ interests above their own. A fiduciary standard for brokers was opposed by President Donald Trump in early 2017, and the financial industry helped defeat it in federal court. Now, under the new SEC rule, brokers will be required to disclose and in some cases reduce their financial conflicts of interest, not eliminate them entirely.

Wall Street’s main overseer is set to adopt new conflict-of-interest rules for brokers, a sweeping regulatory overhaul that has drawn criticism from investor advocates for being too lax, Bloomberg News reported. The measure, expected to be approved today by a divided U.S. Securities and Exchange Commission, will require brokers to act in the “best interest” of clients. What that actually means, however, remains in dispute, and the changes are unlikely to end a decade-long fight over the protections. SEC Chairman Jay Clayton has said the agency’s action will raise the bar for dealing with conflicts while leaving investors free to choose the type of financial professional that suits their needs. The rule -- which will affect tens of millions of investors who buy stocks and bonds to save for college, retirement and new homes -- has won widespread backing from financial firms.

Data services provider Sirius Computer Solutions wants to stop derivatives holders from influencing business decisions to benefit their bottom line at the expense of the borrower, Reuters reported. Language in the financing package backing Sirius’ buyout by private equity firm Clayton, Dubilier & Rice (CD&R) prohibits lenders that own derivative positions from voting on company matters. As investor activism rises, the borrower wants to prevent these holders from declaring a default that could pay off for their hedged trades. The new provision curbs Credit Default Swaps (CDS) holders’ ability to call a default by removing their right to vote on creditor decisions. In the future, companies may also consider blocking CDS holders from owning a loan altogether. Companies are trying to tighten documentation in the $1.2 trillion leveraged loan market to limit aggressive investors from pushing agendas that benefit their CDS holdings. The move to include the new tougher language follows two highly publicized U.S. court cases, one involving homebuilder Hovnanian and the other telecom services provider Windstream.