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March 2, 2020

Wall Street Biggest Banks Shamelessly Trying to Use Coronavirus to Get Federal Reserve to Weaken Rules

FOR IMMEDIATE RELEASE
Monday, March 2, 2020
Contact: 202-618-6433, press@bettermarkets.com

Washington, D.C.  –  Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement in response to the Bank Policy Institute’s request for “Actions the Fed Could Take in Response to COVID-19”:

“It is shameless but not surprising, that Wall Street’s biggest banks would use the coronavirus to attack the financial rules they have been trying to weaken for a decade, including weakening critically important capital and liquidity requirements.  It is even less surprising that they would direct their request to their favorite regulators at the Federal Reserve, which secretly doled out trillions of dollars bailing out Wall Street in 2008-2009 with virtually no public transparency, oversight or accountability.  That was great for Wall Street’s biggest banks, but a disaster for Main Street and should not be repeated now.

“As the coronavirus-created uncertainty mounts and the possibly of financial deterioration increases, the worst thing anyone could do is reduce the biggest banks’ ability to withstand a downturn or shock, which is exactly what Wall Street’s biggest bank lobby group is arguing.  Reducing capital and liquidity while preemptively taking action under Section 13(3) just tees up more taxpayer bailouts and makes them more likely. 

“Most importantly, current conditions relate to the entire economy and financial system, not just Wall Street’s biggest banks.  Rather than one-off reactions to the importuning of a subgroup of self-interested financial actors, the Financial Stability Oversight Council (FSOC) should be meeting and planning daily to be prepared for a comprehensive response if economic activity decreases dramatically and financial conditions deteriorate.  The FSOC was created for these very circumstances:  to provide a coordinated response for the entire financial system in the best interests of the country, not just the best interests of Wall Street’s biggest banks.

“Finally, to the extent Wall Street’s biggest banks are genuinely concerned about having enough capital and liquidity to support the real economy, then they should immediately stop making any additional distributions of capital via dividends or buybacks until there is certainty regarding the threat posed by the coronavirus.  If Wall Street’s biggest banks are unwilling to take that action immediately, then their real motives will be clear, and their deregulatory requests should be seen for what they are: part of their ongoing, years-long attack on the rules.”

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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.

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