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Analysis

March 25, 2024

Standing up to the Bank Lobbyists on Capital

Banking regulators have proposed new, long overdue, capital requirements which will only be applicable to less than 40 of the largest bank holding companies in the country and none of the more than 4,000 community banks. The new rules will be focused on megabanks’ dangerous, higher risk trading and investment activities. Bank capital is critical to protect Main Street families, jobs, small businesses, community banks, the financial system, and the economy.

But Wall Street and its supporters are making more and more false, baseless, and dangerous arguments about capital to protect their bottom line. Reported bank lobbying had already increased 20% and now Wall Street is doubling down on influence tactics that they do not have to report, which include a television ad campaign (with placements on television’s top-rated program- Sunday Night Football), expensive Beltway media sponsorships, social media advertising, and a bank lobbyist website filled with false claims about capital and its importance to our economy.

Better Markets has been working to set the record straight on capital and its importance. Learn more below.

Key Recent Better Markets Materials

In a Financial Times letter, Dennis Kelleher called out big bank lobbyists and their misleading arguments on capital (3/23/34)
Our fact sheet tells the Truth About Wall Street’s Massive Misleading Lobbying Campaign Against Necessary Capital (1/17/24)
Better Markets’ comment letter supporting new capital requirement rules from the banking agencies (1/16/24)
Dennis Kelleher Op-ed in American Banker: Well-capitalized banks are good for everyone, except Wall Street CEOs (8/9/23)
Statement on Fed and FDIC’s Changes to Capital Requirements (7/26/23)
Fact Sheet outlining Ten False Claims About Capital (7/25/23)
Statement on Fed Vice Chair Barr’s Speech on Increasing Capital Requirements (7/10/23)
Letter Asking Fed Chair Powell to Not Let Congress & Wall Street Interfere with Vice Chair Barr’s Holistic Capital Review (3/6/23)
Report on the Importance of Capital Requirements in Protecting our Financial System and Main Street (12/22/22)

Capital in the News 

Reuters: US banking industry starts to pick its battles against new capital rules (8/7/23)

Dennis Kelleher, head of the financial reform advocacy group Better Markets, said the banking industry had made similar complaints in the past which he believed had proven unfounded.

“Wall Street is expert at hiding their special interests behind the concerns of others, which they inflame with scare tactics and false claims,” he said.

“What they don’t talk about is the threat to the economy and lending and main street and families and contagion from under-capitalized banks.”

Reuters: US regulators to unveil plan for banks to build cash reserves (7/26/23)

U.S. regulators are set to propose a rule that could significantly raise capital requirements for larger banks, forcing them to cut costs and retain earnings in an effort to cushion against potential losses that could harm customers and investors. …

“Bank capital is critical,” said Dennis Kelleher, president and CEO of Better Markets, which advocates for tougher financial rules. “However, maximizing Wall Street’s bonuses depends on minimizing capital and that’s why Wall Street fights to prevent regulators from requiring them to have enough capital.”

MarketWatch: FDIC approves proposed capital requirements for U.S. banks (7/27/23)

Dennis Kelleher, chief executive of Better Markets, said bank claims about the rules restricting capital flow are essentially false.

“Maximizing Wall Street’s bonuses depends on minimizing capital and that’s why Wall Street fights to prevent regulators from requiring them to have enough capital,” Kelleher said in a prepared statement. “Of course, Wall Street’s banks can’t admit that, so they hide behind a smokescreen of false, baseless, and dangerous arguments against capital that do not withstand scrutiny.”

Politico Morning Money (7/26/23)

Watchdogs challenge banker script on capital — Better Markets is out with a new fact sheet in which it tries to rebut bank executive and lobbyist arguments against forcing banks to tap more capital, describing the talking points as “a smokescreen to conceal their self-interest in keeping the amount of capital as low as possible to keep their bonuses as high as possible.” “There is no evidence banks have ever been overcapitalized and there has never been a banking or financial crash caused by banks that had too much capital,” the group said.

New York Times; The Fed’s Vice Chair for Supervision Suggests Big-Bank Regulation Changes (7/11/23)

Still, “we’re not going to know how significant these changes are until the lengthy rule-making process plays out over the next couple of years,” said Dennis Kelleher, the chief executive of the nonprofit Better Markets.

Mr. Kelleher said that in general Mr. Barr’s ideas seemed good, but added that he was troubled by what he saw as a lack of urgency among regulators.

“When it comes to bailing out the banks, they act with urgency and decisiveness,” he said, “but when it comes to regulating the banks enough to prevent crashes, they’re slow and they take years.”

CNN: Banks with at least $100 billion in assets could face higher capital limits (7/11/23)

Federal Reserve Vice Chair for Supervision Michael Barr said Monday he is proposing stricter bank capital requirements in light of three major US bank failures earlier this year. …

Meanwhile Dennis Kelleher, CEO of Wall Street reform group Better Markets, applauded the proposals, saying they “promote bank stability, lending, and economic growth, not constrain it.”

“When large banks have too little capital, Main Street families, small businesses, community banks and the entire economy pay the price,” he said in a statement shared with CNN.

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