Brown Blast Trump Regulators For Rolling Back Key Financial Protections
WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – released the following statement after the federal banking agencies finalized changes to the Swap Margin rule, the Volcker Rule, and a rule permitting “Rent-a-Bank” schemes. These are additional actions in a long line of decisions by the Trump regulators to put Wall Street interests over those of hardworking Americans as the economy struggles to recover from the Coronavirus pandemic.
“The banking regulators' decision today effectively eliminates the requirement for banks to collect initial margin when entering into swaps and derivatives with affiliates. Initial margin is a basic protection against defaults and provides stability to the financial system. The regulators’ new threshold for the posting of initial margin all but ensures that banks will never collect it from affiliates. As banks continue to enter into complex, interconnected transactions, today’s changes will leave banks, and the entire financial system, at greater risk for contagion during times of financial stress.
“The financial regulators continued to dismantle the Volcker Rule’s protections by allowing banks to make even more risky bets with taxpayer money. The rollback approved today allows banks to increase speculative investments precisely when economic and market conditions call for safeguarding capital, not gambling. Instead of taking steps to protect the financial system and ensure that banks preserve their capital, the financial regulators have once again caved to the wishes of Wall Street at the expense of taxpayers.
“Finally, for years, under both Democratic and Republican administrations, the FDIC cracked down on predatory payday lenders that funneled their loans through banks to offer high-interest loans in violation of state law. The FDIC has now done a complete 180—instead of protecting consumers, the new rule protects payday lenders and enables them to carry out these abusive “rent-a-bank” schemes. The new rule is also just one more way the Trump administration has found to sell out the American people in favor of his corporate cronies.”
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