Warren, Colleagues Urge Bank Regulators to Withdraw Proposal to Gut Safety and Soundness Standards at the Nation's Largest Banks
“Reducing safety and soundness standards for the very largest and riskiest banks is always dangerous, but even more so now as the Trump administration’s policies drive the economy toward the edge of a cliff.”
Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, led six of her colleagues in 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 the agencies to withdraw a proposed rule that would slash the enhanced supplementary leverage ratio (eSLR), a key post-2008 financial crisis safeguard that strengthens the resiliency of the nation’s largest and riskiest banks. Ranking Member Warren previously requested the banking regulators provide an economic analysis of the proposed rule, which they failed to provide.
Signers of the letter include Senators Jack Reed (D-RI), Bernie Sanders (I-VT), and Tina Smith (D-Minn.), and Representatives Jerrod Nadler (D-NY), Rashida Tlaib (D-MI), and Pramila Jayapal (D-WA).
“It is dangerous to relax standards for Wall Street, just as President Trump’s reckless policy agenda pushes our economy to the brink,” wrote the lawmakers. “The agencies risk repeating history, putting depositors, the financial system, and broader economy at risk. Excessive leverage at big banks was a major contributor to the 2008 financial crisis as well as the 2nd, 3rd, and 4th largest bank failures in U.S. history just two years ago.”
The lawmakers warned that the proposed rule sets the path for bank failures and taxpayer bailouts: “The proposal is extreme, even compared to deregulatory efforts during the first Trump administration, as it would reduce capital by nearly three times more than a similar proposal from 2018 that was never finalized. Advancing this proposal undermines the progress made to the bank capital regime over the past 15 years and lays the groundwork for more big bank failures, bailouts, and economic devastation.”
The lawmakers continued: “The agencies’ proposal would reduce GSIBs’ capacity to lend by up to $2.7 trillion. The reduction in lending could impair the ability of businesses to open a new store or launch a newproduct, of households to finance a home or vehicle, or otherwise create headwinds for our economy at a precarious moment.”
“The eSLR is a vital tool that ensures firms can weather good times and bad and continue serving their communities without disruption. Reducing safety and soundness standards for the very largest and riskiest banks is always dangerous, but even more so now as the Trump administration’s policies drive the economy toward the edge of a cliff,” the lawmakers concluded.
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