Sen. Elizabeth Warren, D-Mass., speaks during a Senate Armed Services Committee hearing on Afghanistan and regional security in South and Central Asia on Tuesday, Oct. 26, 2021, in the Dirksen Building.
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Senator Elizabeth Warren accused Federal Reserve Chairman Jerome Powell of doing the bidding of the financial industry as he considers changes to a sweeping set of regulations aimed at boosting the capital buffers large U.S. banks are required to hold.
on June 17 letter According to CNBC, Warren asked Powell to respond to reports that the increase in capital required under the proposal, known as the Basel III endgame, would be “cut in half.”
“I am disappointed by media reports that suggest you personally intervened to delay and water down Basel III capital rules after multiple meetings with the CEOs of big banks,” said Sen. Warren, D-Mass.
Last year, three U.S. banking regulators, including the Federal Reserve, unveiled proposed rules, a long-awaited shift in the system around bank capital and risky activities such as trading and lending. The regulations incorporate new international standards developed in response to the 2008 global financial crisis.
“These rules are critical and long overdue, especially in the wake of the collapse of Silicon Valley and Signature Bank, and as risks from a weak commercial real estate market and other economic threats ripple through the banking system,” Warren said.
Bank chief executives and their lobbying groups say raising rates is too aggressive and will force the industry to cut lending.
In March, Powell told lawmakers he expected “broad and substantive changes” to the proposal after the industry launched a campaign against the rules. JPMorgan Chief Executive Jamie Dimon coordinated efforts to weaken the rules, urging executives to appeal directly to Powell, The Wall Street Journal reported last month.
“It now appears that you are directly executing the dictates of the banking industry, rewarding them for their extensive personal lobbying against you,” Warren wrote in the letter. Financial security for working families to line the pockets of wealthy investors and CEOs.”
She further criticized Powell, saying that “regulatory rollback” under the leadership of the Fed chairman led to the regional banking crisis in 2023 and “enriched Jamie Dimon and his Wall Street cronies.”
Warren urged Powell to allow the Fed to vote on the original, tougher Basel proposal by the end of the month. The window to finalize and approve the rules before the November U.S. election is closing, and analysts say the proposal could be delayed or canceled if Donald Trump is re-elected president.
“Instead of following Mr. Dimon’s orders, you should do your job and have the board vote on a 16% capital increase before June 30, as global regulators deem necessary to prevent another financial meltdown,” Warren said. crisis.
The Fed did not immediately respond to a request for comment on Warren’s letter.
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