FOR IMMEDIATE RELEASE
Thursday, March 1, 2018
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com
Washington, D.C. – Dennis Kelleher, President and CEO of Better Markets, issued this statement regarding Fed Chairman Jerome Powell’s testimony today before the Senate Banking Committee regarding S. 2155 and the potential deregulation of foreign banks in the U.S.:
“Chairman Powell was correct answering the question that Senate bill 2155 does not “require” deregulating of foreign banking organizations (FBO) operating in the U.S. like Deutsche Bank, but that is exactly what is going to happen.
“First, Treasury Secretary Mnuchin testified as much before the Senate Banking Committee recently. Second, a letter from the Institute of International Bankers (IIB) objecting to Ranking Member Brown’s amendment at the committee’s markup to prohibit this from happening also makes this clear. Third, the U.S. will not – and probably cannot — treat FBOs operating in the U.S. differently that it treats similar U.S. banks. It is probably not legal and, even if it was, other countries would retaliate against U.S. banks operating in their countries, ensuring that the U.S. will treat FBOs exactly the same as U.S. banks.
“The bottom line is that S 2155 does not require the deregulation of foreign banks, but they will no doubt be deregulated, which will once again put US taxpayers on the hook for bailouts of foreign banks rather than the taxpayers of those foreign countries. For example, if the U.S. did not bail out Deutsche Bank’s U.S. operations conducted by its U.S. subsidiary Taunus in 2008-2009, it would have failed and Germany would have had to bail out Deutsche Bank, putting German taxpayers on the hook. Instead, $354 billion in U.S. bailouts in 2008-2009 substituted U.S. taxpayers for German taxpayers.
“That is going to be the inevitable result of enacting S 2155.”
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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.
