Senate Banking Democrats Demand Agencies Provide More Rigorous Analysis of Impacts of Easing Key Wall Street Safeguard, Call for Extension of Comment Deadline
“Changes to such a significant pillar of the post-Global Financial Crisis bank regulatory framework should be accompanied by robust economic impact analyses, as well as a clear explanation of the rationale behind such changes for our constituents.”
“The economic costs of rushing through this type of proposal, and potentially getting it wrong, could be severe, and would be borne by American taxpayers, small businesses, and low- and middle-income households across the country.”
Text of Letter (PDF)
Washington, D.C. – Today, U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, and ten of her Democratic colleagues on the Committee sent a letter to Michelle Bowman, Federal Reserve Vice Chair for Supervision, Jonathan Gould, Comptroller of the Currency, and Travis Hill, Acting Chairman of the Federal Deposit Insurance Corporation calling for an extension of the comment deadline and requesting information on the proposed reduction of the enhanced supplementary leverage ratio (eSLR), a key post-2008 financial crisis safeguard that strengthens the resiliency of the largest and most complex banks. Senators Jack Reed (D-RI), Mark Warner (D-VA), Chris Van Hollen (D-MD), Catherine Cortez Masto (D-NV), Tina Smith (D-Minn.), Raphael Wanock (D-GA), Andy Kim (D-NJ), Ruben Gallego (D-AZ), Lisa Blunt Rochester (D-DE), and Angela Alsobrooks (D-MD) signed the letter.
“We write to request that you provide Congress and the public with more rigorous data and analysis on the economic impacts of the agencies’ proposed reduction of the enhanced supplementary leverage ratio (“eSLR”), an important safeguard created through the Dodd-Frank Wall Street Reform and Consumer Protection Act that promotes the resiliency of the largest and most complex bank … the proposal may have significant effects on our financial system. It is critical for the agencies to provide Congress, mid-sized and community banks, other entities in the U.S. financial system, and the broader public with sufficient time to evaluate the proposal,’” wrote the Senators.
The Senators outlined the need for sufficient data and analysis on the proposal, including its potential risks: “The reduction in eSLR requirements could cause a reduction in GSIB capital levels of more than $200 billion. For example, the agencies should quantify the increase in likelihood of GSIB failures or other risks to the overall financial system, given that the significant reduction in capital could cause ‘a potential increase in the leverage of GSIBs.’ In addition, the agencies should further explain their conclusion that the proposal could cause ‘a potential increase in the costs associated with the failure of insured depository institution subsidiaries of GSIBs.’ The agencies should estimate the potential increase in the costs of those failures to the Deposit Insurance Fund (“DIF”) and the broader economy.”
In the letter, the Senate Banking Committee Democrats requested that regulators submit answers to the questions “no later than September 2, 2025, and alongside a notice extending the comment deadline by 90 days”.
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