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Senator Elizabeth Warren alleges that Federal Reserve Chair Jerome Powell is doing the bidding of the banking industry by advocating for “slashing” capital requirements called for under new regulations known as Basel III, CNBC reports.
“I am disappointed by press reports indicating that you are personally intervening — after numerous meetings with big bank CEOs — to delay and water down the Basel III capital rules,” Warren wrote in a letter obtained by CNBC.
In addition to Powell’s recent testimony before Congress, where Powell suggested abandoning the rules entirely was a “very plausible option,” Warren’s letter cites a Wall Street Journal article detailing personal lobbying meetings with J.P. Morgan Chase CEO Jamie Dimon and other banking executives.
“Taking orders from the industry that caused the 2008 economic meltdown would sacrifice the financial security of middle-class and working families to
line the pockets of wealthy investors and CEOs, and further undermine public faith in the integrity of the Fed — a faith that has already declined considerably due to a series of scandals and failures under your watch,” Warren writes.
She also points out that Powell had initially expressed support for the rules agreed upon by global financial regulators in July 2023 following a series of bank failures.
The Wall Street Journal article suggested that the required capital increases for large banks could be on average about half as much as originally proposed under the regulators’ new proposals.
In her letter, Warren urges Powell to allow the Federal Reserve Board to vote on the originally proposed 16% percent increase by June 30th.
According to CNBC, there are concerns that time is running out to finalize and approve the rules before the November election, with analysts suggesting that the implementation could be delayed or halted entirely if Donald Trump wins the election.
A Federal Reserve spokesperson told CNBC that Warren would receive a response to her letter.
According to CNBC, banks and their lobbying organizations have called the rules unnecessarily aggressive and said they could lead banks to curtail lending.