Warren Calls on Chair Powell to Finalize Capital Standards Rules for Giant Banks Quickly, Resist Bank Lobby Pressure
Press Release
"On July 27, 2023, the Fed voted to advance proposed rules to strengthen capital standards for the nation's biggest banks, implementing the remaining provisions of the international Basel III agreement that was initially launched in response to the 2008 financial crisis and finalized in December 2017. This was an important and long overdue step forward, and I urge you to resist industry pressure to weaken the proposal and finalize the rules as quickly as possible. But I am concerned that your intent to seek "potential modifications to the proposals' means that you will seek to weaken them. This would be a grievous error."
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"I am concerned that even though you voted to advance the Fed's proposed rule, your tepid embrace of the proposal seems to suggest that you may share Wall Street executives' concerns that stronger capital requirements will eat into their bonuses. Your opening statement on the proposal notes that you "support putting' the proposal "out for comment' but at no point did you indicate that you support the proposed rule or even recognize the need for it Rather than declare clear support for stronger capital standards, the bulk of your statement is focused on your interest in seeing "potential modifications to the proposals,' raising concerns that you intend to water down the proposed rules in line with the banking industry's wishes. This would be at odds with your comments following the release of the Fed's post-mortem of SVB's failure in which you clearly stated that you "agree with and support (Vice Chair for Supervision Barr's) recommendations to address our rules and supervisory practices' -- which included improving capital standards.
Your uncertain positioning on the Fed's proposal, just months after the banking system was nearly brought to its knees by the sudden collapse of banks you enthusiastically supported deregulating, reveals a broader lack of leadership. Your tenure as Fed Chair has been defined by delivering on Wall Street executives' wish lists, most notably through your support of the 2018 Dodd-Frank rollback that "was designed to ensure that lenders with between $50 billion and $250 billion in assets -- then covering about two dozen of the country's largest banks, including SVB -- no longer faced a range of strict rules that apply to their bigger counterparts'... Under your watch and with your support, the Fed Board also weakened oversight of the regulatory framework for the biggest banks well beyond what was required of the law.
Following the collapse of SVB and Signature, you admitted that "I've been chair(ing) the (Fed) board for five-plus years now, and I fully recognize that we made mistakes we need to do better I do feel that I'm personally accountable to do what I can to foster measures that will address the problems." The Fed's proposal to strengthen capital requirements for big banks provides you an opportunity to do so. It is critical for the Fed's credibility as a regulator that the Chair clearly support the United States' leadership in implementing the Basel reforms. I strongly urge you to accept accountability for your failures, resist industry pressure to weaken and further delay the rules, and finalize this proposal as quickly as possible."
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