Senator Elizabeth Warren has accused Federal Reserve Chair Jerome Powell of siding with big banks. She’s worried because Powell might reduce the amount of money these banks need to keep in reserve. These rules were created to make sure banks are more stable after the 2008 financial crisis.
Warren expressed disappointment over reports that Powell has been influenced by numerous meetings with major bank CEOs to delay and weaken the Basel III capital rules.
She emphasized the importance of these regulations, especially in light of recent bank failures and ongoing economic risks. According to Warren, the proposed rules are crucial and long overdue to protect the banking system from vulnerabilities such as the weak commercial real estate market.
Banking industry leaders and lobbying groups have argued that the proposed capital increases are too stringent and would negatively impact lending activities. In March, Powell indicated to lawmakers that substantial changes to the proposal were expected following the banking industry’s opposition.
Notably, JPMorgan Chase CEO Jamie Dimon has reportedly coordinated efforts to persuade Powell to soften the regulations, including urging other CEOs to lobby Powell directly.
Warren’s letter criticizes Powell for seemingly acting in the interests of the banking industry, which she argues led to the 2008 financial crisis.
She contends that such actions would jeopardize the financial security of middle-class and working families while benefiting wealthy investors and CEOs. Warren also blamed regulatory rollbacks under Powell’s leadership for the regional banking crisis of 2023 and accused him of enriching Wall Street executives like Jamie Dimon.
Warren urged Powell to hold a Federal Reserve Board vote on the original, stricter Basel III proposal by the end of June. She highlighted the urgency of finalizing the rules before the upcoming U.S. elections in November, suggesting that the regulations could be delayed or nullified if political changes occur. In response, a Fed spokesperson stated that the letter had been received and would be addressed.
