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July 29, 2020

Wall Street Again Using Pandemic as a Pretext to Get More Deregulation

From the beginning, Wall Street’s biggest banks have tried to use the pandemic as a pretext for dangerous deregulation, as we pointed out here, but they just won’t stop. They are trying again to reduce their capital buffers, which is all that stands between a failing bank and taxpayer bailouts. In response, Better Markets sent a letter detailing why the capital leverage ratio and banks’ capital cushions are so important to financial stability and to avoiding taxpayer bailouts.

In a statement released in conjunction with the letter, Dennis Kelleher, President and CEO of Better Markets, said:

“Wall Street’s biggest banks are lobbying to weaken capital requirements and increase their leverage in the face of unprecedented uncertainty and at the very same time they are ejecting tens of billions of dollars in dividend payments each quarter. However, now they are claiming without any evidence that this deregulation is necessary for them to support economic growth during the COVID-19 pandemic. This is false and proved false by their own actions. If those banks need capital that they were going to use to support Main Street families and businesses, as they claim, then they could and should stop paying dividends and use that capital to lend to Main Street.

“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 redirect shareholder dividend payments to Main Street lending. The fact that Wall Street’s most dangerous too-big-to-fail banks refuse to do that proves that they are once again just shamelessly using the pandemic as a pretext for their deregulation agenda, which they have done since the start of the pandemic.

“Finally, as discussed in a letter Better Markets sent to the Senate Banking Committee, reducing required bank leverage ratios does not mean Wall Street’s banks will increase lending to Main Street at all.

Read the entire statement



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