Warren Urges Fed, FDIC, OCC Not to Grant Wall Street's Number One Deregulatory Wish Amid Trump-Fueled Economic Uncertainty
Trump-appointed Regulators Plan To Soon Roll Back Leverage Rules That Protect Against Bank Failures
“Deregulating Wall Street is always dangerous, but it is especially destructive to do so when the economy already faces serious risk from Donald Trump’s chaotic tariff policies, Republicans’ efforts to blow a hole in the deficit to finance tax cuts for billionaires and big corporations, and America’s involvement in another war in the Middle East.”
“Families, small business, and taxpayers will suffer the consequences if bank regulators get it wrong”
Text of Letter (PDF)
Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to the Vice Chair for Supervision of the Federal Reserve Board (Fed) Michelle Bowman, Acting Comptroller of the Currency (OCC) Rodney Hood, and Acting Chairman of the Federal Deposit Insurance Corporation (FDIC) Travis Hill, urging them to avoid weakening a critical capital requirement that was created in the aftermath of the 2008 financial crisis to protect against big bank failures.
“I write to express grave concern regarding reports that the Fed, OCC, and FDIC intend to soon grant the top item on Wall Street’s deregulatory wish list: eviscerating the enhanced supplementary leverage ratio (eSLR), one of the most important post-2008 financial crisis safeguards established by your agencies,” wrote Ranking Member Warren.
Ranking Member Warren continued: “The eSLR requires that for every $95 of borrowed money used to finance loans and other investments, Wall Street banks must also use at least $5 of their own money. Megabanks must have their own skin in the game to absorb losses and ensure they can continue offering financial services to households and businesses in periods of stress, instead of collapsing, destabilizing the financial system, and begging for bailouts. You should not weaken this important protection against financial instability and economic devastation.”
The Ranking Member also laid out concerns with the big banks’ motivation behind deregulation: “Big banks sometimes drop the curtain and reveal the true reason they pursue capital deregulation. As JPMorgan’s CFO once stated, a refusal to reduce the eSLR could ‘impact the pace of capital return.’ In 2024, with existing eSLR requirements in place, the six largest banks paid more than $100 billion in dividends and buybacks – the highest returns since 2021. Clearly, the eSLR does not even inhibit banks’ ability to handsomely reward shareholders.”
Ranking Member Warren also outlined how, if these agencies do choose to weaken the eSLR, they must provide the public with a robust analytical justification – an argument previously endorsed by the agency regulators: “It would be hypocritical and dangerous to propose weakening safeguards without meeting the same type of robust analytical justifications for which you have previously advocated.”
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