FOR IMMEDIATE RELEASE
Tuesday, August 4, 2020
Contact: Pamela Russell at 202-618-6433 or prussell@bettermarkets.com
Washington, D.C. – Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, sends letter to the Chairman of the Federal Reserve, Jerome Powell, opposing the Fed’s lobbying Congress to weaken the leverage ratio applicable to Wall Street’s biggest, most dangerous banks:
“One of the biggest mistakes financial regulators made in the years before the 2008 financial crash was to join with the industry in deregulating the industry. One of their other big mistakes was to uncritically accept virtually any industry claim, no matter how baseless and self-serving. Regrettably, history appears to be repeating itself, with the latest example coming from the Federal Reserve.
“The Fed, the primary regulator of Wall Street’s biggest, most dangerous banks, should not be joining those banks in lobbying Congress to weaken capital requirements given the widespread, deep and ongoing economic damage caused by the COVID-19 pandemic. As Chairman Powell has repeatedly stressed, this is a time of “extraordinary uncertainty” with “considerable risks” to the economic outlook of the Fed. Under such unpredictable circumstances, where downside risks are potentially catastrophic, the financial rules protecting the financial system, Main Street families and the economy should not be weakened.
“The focus of the lobbying, the tier 1 leverage requirement, increases financial system stability and reduces the risk of taxpayer bailouts. In addition, it facilitates bank lending to the productive economy, helping Main Street families and businesses, as we detailed in our letter to Chairman Powell. The evidence-free industry claims to the contrary are at best misleading or baseless, if not simply false. The Fed should know better than to repeat the mistakes of recent history, which included inadequate bank capital requirements that post-crisis reforms have sought to address.
“Before key financial protection rules like the leverage ratio are weakened, Wall Street’s banks should put their own money where their lobbyist’s mouth is and stop ejecting tens of billions of dollars in shareholder dividend payments. That money could – and should – be redirected to Main Street lending, otherwise serving their customers’ needs or increasing their capital cushions in the face of unprecedented uncertainty caused by COVID-19. The fact Wall Street’s most dangerous too-big-to-fail banks refuse to do that proves that they are once again just using the pandemic as a pretext for their deregulation agenda.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
