Under Trump, Banking Watchdog Trades Its Bite for a Tamer Stance The agency had previously downgraded some banks two levels at a time, but a footnote in a new manual says the policy is not to lower a bank’s rating by “more than one rating level.” The new policy also suggested that downgrades could be avoided altogether, emphasizing that the agency must “fully consider the corrective actions taken by a bank.” If the bank has fixed its behavior, the manual said, “the ratings of the bank should not be lowered solely based on the existence of the practice.” For banks, a high rating is not just a point of pride: A low one can scuttle merger plans. Yet under the Trump administration, the agency recently granted a license to the Bank of Tokyo-Mitsubishi UFJ, a big Japanese bank that was fined $250 million by New York State’s financial regulator in a sanctions-violation case in 2013, and reached a $315 million settlement when accused separately of “misleading regulators.” In a letter to Mr. Noreika’s office, the New York regulator complained that the agency had granted the application without input about the bank’s state regulatory problems. The shift could help revive some of the policies and practices that arose on the agency’s watch amid the financial crisis and banking scandals of a decade ago — and that led congressional investigators to accuse it of “systemic failures.” The recent changes under Mr. Noreika are part of a concerted effort by the Trump administration to unwind Obama-era rules and install a set of regulators who come from the financial industry itself.
