BROWN URGES FINANCIAL REGULATORS TO ENSURE THAT TEMPORARY SUSPENSIONS OF IMPORTANT FINANCIAL PROTECTIONS DO NOT TURN INTO PERMANENT ROLLBACKS
Brown To Regulators: A Public Health Crisis Is Not The Time To Push Wall Street’s Deregulatory Agenda
WASHINGTON, D.C. -- U.S. Sen. Sherrod Brown (D-OH), Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs today sent a letter to the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) urging regulators that temporary changes to financial safeguards that have long-been on industry wish lists should not become permanent. Senator Brown in his letter made clear that at the height of the COVID-19 crisis, agencies should be focused on helping American borrowers, workers, and small businesses not on rolling back key financial protections.
“The agencies must not extend these suspensions into permanent rollbacks. We know from the 2008 financial crisis that lax supervision, weak capital standards and lending requirements, and weak consumer protections caused devastating results for working Americans. Temporary regulatory changes intended to help consumers and small businesses weather this crisis should not translate into permanent giveaways for Wall Street at the expense of those same consumers and small businesses,” wrote Senator Brown.
A copy of the letter can be found HERE and below:
The Honorable Jerome Powell
Board of Governors of the Federal Reserve System
The Honorable Joseph Otting
Office of the Comptroller of the Currency
The Honorable Jelena McWilliams
Federal Deposit Insurance Corporation
The Honorable Rodney Hood
National Credit Union Administration
Dear Chairs Powell, McWilliams and Hood, and Comptroller Otting:
The COVID-19 pandemic is an unprecedented public health crisis with severe economic impacts on working Americans, small businesses, and homeowners and renters. Your agencies are charged with ensuring that banks and credit unions serve their communities responsibly and that our financial system remains strong and resilient. Right now, many banks and credit unions under your supervision are playing an important role in helping borrowers and small businesses get relief. Unfortunately, some in the industry have taken advantage of the current health and economic crisis to obtain deregulatory changes – changes that were sought long before the COVID-19 crisis.
Congress passed the CARES Act to help address the economic impact of the COVID-19 pandemic, including several temporary measures intended to provide banks and credit unions with flexibility to work with borrowers and help their communities during this crisis. Yet, your agencies have gone further than what Congress provided: loosening capital standards to make it easier to make capital distributions, easing stress testing requirements, extending the regulatory impact of accounting standards for an additional two years, limiting or delaying important appraisal requirements for high-value real estate transactions, and issuing guidance encouraging small-dollar lending but without protections for consumers from predatory lending.
More troubling is that this follows a number of recent actions that your agencies have taken to roll back important protections put in place after the last financial crisis, especially for the largest banks. Your agencies have justified many of these changes by stating that banks have never been stronger. However, rushing to further reduce regulatory requirements during the pandemic raises concerns that the banking system is not strong enough to weather this crisis on its own.
The height of a pandemic is not the time to tear down rules that protect hardworking families – many of whom have still not recovered from the Great Recession – in order to bolster the industry’s bottom lines. There have been reports that the industry’s long fought efforts to permanently loosen requirements will be successful, and that delays to the agencies’ current expected credit losses rule and reduction of other capital requirements, for example, will stay on after this crisis.
The agencies must not extend these suspensions into permanent rollbacks. We know from the 2008 financial crisis that lax supervision, weak capital standards and lending requirements, and weak consumer protections caused devastating results for working Americans. Temporary regulatory changes intended to help consumers and small businesses weather this crisis should not translate into permanent giveaways for Wall Street at the expense of those same consumers and small businesses.
Thank you for your attention to this important matter.
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