FDIC Rules a Good First Step, But Much More Needs to be Done to Protect the American People From Wall Street
“The rules announced today by the FDIC to increase capital at the largest U.S. banks over the next five years are a step in the right direction. But, almost five years after the worst financial crash since 1929, requiring the few largest banks that pose the greatest threat to our economy to have only 5% or 6% capital in five more years is too little too late. Much more needs to be done to protect the American people from another financial crisis and yet more bailouts of Wall Street,” said Dennis Kelleher, President and CEO of Better Markets, Inc., a nonprofit organization that promotes the public interest in the financial markets.
“The last crisis cost the U.S. more than $12.8 trillion dollars, largely because these few megabanks had so little capital that they were bankrupt after very small losses. U.S. taxpayer bailouts provided the capital the banks themselves lacked after the fact. Requiring increased bank capital will help prevent this from happening again,” Mr. Kelleher said.
“However, the banks had losses far in excess of 6% in 2008, and that was even after massive taxpayer and government bailouts. These few banks pose a grave and unique threat to our financial system and economy. Regulators must require them to have enough capital to be able to absorb all their losses so that the American people don’t have to bail them out again. That means capital of at least 20%. Until then, taxpayers will continue to be on the hook for Wall Street’s losses,” said Mr. Kelleher.
Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure thereby eliminating or minimizing the need for more taxpayer funded bailouts. To learn more, visit www.bettermarkets.com.