Two courageous public servants fought against the dangerous deregulation of the banking industry during the Trump administration, which was led by Federal Reserve Vice Chair for Supervision Randy Quarles with the full support of Fed Chair Jay Powell. One was Fed Governor Lael Brainard (whose outstanding record is detailed here) and the other was FDIC board member Marty Gruenberg, who issued 15 dissenting statements (see list below).
Despite claims by some to rewrite history, the deregulatory actions taken under Jay Powell’s chairmanship have materially weakened the most important financial protection rules, leaving the overall financial system in greater risk of a crisis and increasing the probability of another taxpayer bailout. The most important reforms were implemented across five key areas, all of which were damaged by these actions: capital, liquidity, supervision, living wills, and proprietary trading.
As the nominee for the next Chair of the Fed is considered, it is important to remember that it isn’t just organizations like Better Markets that have been fighting against and speaking out about the deregulations under Powell. Two respected board members of the Fed and the FDIC not only voted against these actions—something that historically has been rare—but also wrote dissenting statements detailing the reasons the actions posed dangers to the stability of the financial system. The damage caused by this deregulation must be admitted so that we can work to re-regulate the country’s largest banks to protect Main Street families, our financial system, and the entire economy.
FDIC Board Member Marty Gruenberg’s Dissenting Statements:
- Proposed Rule: Modifications to the Enhanced Supplementary Leverage Ratio 04/11/2018
- Proposed Rule: Applicability Thresholds for Regulatory Capital and Liquidity Requirements 11/20/2018
- Proposed Rule: Title I Resolution Plans 04/16/2019
- Advance Notice of Proposed Rule: Resolution Plans Required for Insured Depository Institutions with $50 Billion or More in Total Assets 04/16/2019
- Proposed Rule: Alignment of Capital and Liquidity Requirements for Foreign Banking Organizations 04/16/2019
- Final Rule: The Volcker Rule 08/20/2019
- Proposed Rule: Swap Margin Requirements 09/17/2019
- Final Rule: Changes to Applicability Thresholds for Regulatory Capital and Liquidity Requirements 10/15/2019
- Final Rule: Title I Resolution Plans 10/15/2019
- Final Rule: Standardized Approach for Calculating the Exposure Amount of Derivative Contracts 11/19/2019
- Final Rule: Margin and Capital Requirements for Covered Swap Entities 06/25/2020
- Final Rule: Volcker Rule Prohibition on Hedge Funds and Private Equity Funds 06/25/2020
- Final Rule: Eligible Retained Income 08/21/2020
- Final Rule: Net Stable Funding Ratio 10/20/2020
- Final Rule: Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies 10/20/2020