WASHINGTON, D.C.— Phillip Basil, Director of Economic Growth and Financial Stability at Better Markets, issued the following statement in conjunction with a comment letter regarding a proposal from the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to define “unsafe and unsound practices” for the supervisory process:

“The proposal to define ‘unsafe or unsound’ bank practices from the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency is a short-sighted attempt to give banks the freedom to take massive risks and lower their risk management costs. This move would expose the US economy and taxpayer to the catastrophic harm of bank failures. The proposal would destroy the current framework of bank supervision, which instead must be significantly strengthened, considering the massive cutbacks in regulations also being pushed through by the agencies.

“Despite the agencies’ claims in their proposal, the ‘unsafe or unsound’ definition they put forth has no basis in law, previous attempted definitions, or in the over 150 year history of US federal bank supervision. In fact, the proposed definition would only create more uncertainty in the supervisory process and likely have the unintended consequence of making the agencies risk managers on behalf of banks.

“The banking system and greater financial system are facing heightened risks and uncertainty. The proposal should be rescinded, and stronger supervision must be put in place for the protection of our economy and taxpayers.”

Read more in our comment letter.

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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.org.