WASHINGTON, D.C.— Dennis M. Kelleher, Cofounder, President and CEO, issued the following statement in connection with Federal Reserve Board (Fed) Vice Chair for Supervision Michael Barr’s statements on the Fed’s proposed capital rule:

“Today’s action by Federal Reserve Vice Chair for Supervision Michael Barr gutting the proposed capital rule is baseless and unjustified. Remember that Wall Street’s banks attacked the rule before it was even proposed. The threat those banks pose to the country is from being undercapitalized, as proved yet again in the banking crisis of 2023. Wall Street’s propaganda campaign against the rule is based on the ludicrous claim that the proposed rule would result in overcapitalized banks.

“It is telling that the Fed’s capitulation to Wall Street’s attacks on the modest capital proposal did not have facts or data supporting the action. That’s because the ‘broad and material’ changes that Wall Street’s biggest banks insisted on and that Fed Chair Powell championed are unjustified and baseless. The assertions in the speech supposedly defending these actions merely repeat the empty but relentless attacks from Wall Street’s biggest banks, their lobbyists, and political allies, even though they have all been rebutted on the merits here, here and elsewhere.

“This is a sad day for the country and a bad day for Americans, who will remain needlessly exposed to the threats of these gigantic banks. Remember that just last year it was proven that even relatively small, non-Wall Street, and non-globally systemically important banks (GSIB) could not be allowed to fail because they would cause contagion, resulting in other banks failing and threatening the entire financial system and economy. That’s why the Fed, other banking regulators, and the Treasury Secretary invoked the ‘systemic risk exception’ last March, resulting in more than $40 billion in bailouts for those banks and costing Americans much more than that due to the credit contraction and capital flight to safety. Adding insult to injury, Wall Street’s biggest banks continue to complain about having to pay for those bailouts.

“It is unacceptable that the Fed caved to the power, influence and propaganda of Wall Street and its many Washington allies. We will read the re-proposal carefully, but one has to wonder why anyone should participate in the reopened public comment process when it is largely if not entirely overridden by the power, money, influence, and access of Wall Street’s biggest banks, their lobbyists and trade groups, and political allies including the Chair of the Fed himself. If facts determined the Fed’s actions, then there would be no re-proposal. While that of course doesn’t mean that there would have been no changes—proposed rules always change before finalization—Wall Street’s and Chair Powell’s objections to the proposal and demand for ‘broad and material’ changes would have been rejected on the merits. We can only hope that those facts will have more influence on the re-proposal than the original proposal.”

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