We issued a White Paper entitled “Fed Deregulation Has Significantly Weakened Financial Rules that Protect Main Street” with a press release in December 2020. It detailed the many actions taken during Jay Powell’s Chairmanship to dangerously weaken the financial protection rules put in place after the 2008 crash to protect Main Street families’ jobs, homes, savings, businesses and so much more. (That crash cost more than $20 trillion in lost GDP.)
Given the attention to whether Chair Powell will be reappointed or not, including as recently reported in the Wall Street Journal and by Reuters, it is unsurprising that this White Paper has received a great deal of interest lately. The bottom line is that Chair Powell supported and voted for all of that deregulation (spearheaded by the Vice Chairman of Supervision Randy Quarles), even though his most recent Congressional testimony suggested otherwise, which prompted us to issue a press release to set the record straight: “Contrary to His Statements to the Senate Banking Committee Today, Federal Reserve Chair Powell Has Dangerously Deregulated Banks.”
The current focus on the Chair position has also caused people to ask about the role of Governor Lael Brainard regarding financial regulation (or, more accurately, deregulation) during the Trump administration. Gov. Brainard’s record on these matters was dramatically different than Chair Powell and was outstanding. As listed and hyperlinked below, Gov. Brainard repeatedly voted against and dissented from Chair Powell’s deregulation during the Trump years. These votes/dissents, along with her speeches and other public statements, were only the visible part of her fight against the deregulation juggernaut, as detailed in this June 2019 article: “How an Obama Fed appointee is scuttling Wall Street’s bid to ease rules.”
As noted in that article and as proved by the dissents below, “Brainard’s voting record shows she has pushed back against moves to relax rules on capital, liquidity, bank living wills, and annual health checks [i.e., resolution plans] for big banks.” Unlike other agencies like the SEC and CFTC, voting no and dissenting has historically been infrequent at the Fed. In fact, Gov. Brainard’s vote against a deregulatory rule in April 2018 was the first time a Fed governor voted against a regulatory change in more than seven years at that time. Nevertheless, throughout the Trump years, she was a very effective, consistent, and stalwart defender of the critical financial protection rules that protect Main Street families, our financial system, and the entire economy.
Fed Governor Brainard’s Rulemaking Dissents:
Final Rule: Net Stable Funding Ratio: Liquidity Risk Measurement Standards and Disclosure 10/20/2020
Final Rule: Margin and Capital Requirements for Covered Swap Entities 6/25/2020
Final Rule: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds 6/25/2020
Final Rule: Amendments to the Regulatory Capital, Capital Plan, and Stress Test Rules 3/4/2020
Proposed Rule: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds 1/30/2020
Proposed Rule: Margin and Capital Requirements for Covered Swap Entities 10/28/2019
Finale Rule: Prudential Standards for Large Bank Holding Companies, Savings and Loan Holding Companies, and Foreign Banking Organizations 10/10/2019
Final Rule: Changes to Applicability Thresholds for Regulatory Capital and Liquidity Requirements 10/10/2019
Final Rule: Resolution Plans Required 10/10/2019
Final Rule: Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds 10/8/2019
Proposed Rule: Resolution Plans Required 4/8/2019
Proposed Rule: Proposed Changes to Applicability Thresholds for Regulatory Capital and Liquidity Requirements 10/31/2018
