U.S. Markets

Fed's Dudley appeals to Congress to 'do no harm'

FILE PHOTO: New York Fed President William Dudley takes part in a panel convened to speak about the health of the U.S. economy in New York, U.S. on November 18, 2015. REUTERS/Lucas Jackson/File Photo

NEW YORK (Reuters) - The Federal Reserve’s point-person on Wall Street appealed to Congress on Monday to “do no harm” as it considers slicing back regulations put in place to protect the U.S. economy in the wake of the financial crisis.

New York Fed President William Dudley, who announced Monday morning he would retire earlier than expected in mid-2018, said that while there were some rules that could be adjusted the main tenets of stronger capital, liquidity and clearing standards must be protected.

U.S. President Donald Trump and the Republican-controlled Congress aim to loosen requirements on banks and financial markets in general to free up capital flow and encourage economic growth. But Dudley and other regulators have warned not to go too far in revamping rules and laws put in place to avoid a repetition of the 2007-2009 crisis and deep recession.

“As we reflect on potential changes to the U.S. regulatory regime, we should not lose sight of the horrific damage caused by the financial crisis, including the worst recession of our lifetimes and millions of people losing their jobs and homes,” said Dudley, 64, a close ally of outgoing Fed Chair Janet Yellen.

“We had a woefully inadequate regulatory regime in place, and while it is much better now, there is still work to do,” he added at the Economic Club of New York. “We should finish the job as quickly as possible, and we should do no harm as we adjust our regulatory regime to make it more efficient.”

Dudley, among the most influential members of a central bank in the midst of a sweeping leadership overhaul, did not comment on monetary policy in his prepared remarks. Nor did he mention retirement from the New York Fed, which serves as the central bank’s eyes and ears on Wall Street.

Reporting by Jonathan Spicer; Editing by Chizu Nomiyama