Just months after Republicans and Democrats joined hands to gut key Wall Street safeguards, President Donald Trump's Federal Reserve began doing its part to loosen restrictions on massive American banks on Wednesday by voting to approve a plan that critics condemned as a dangerous step toward yet another financial crisis.
"Ten years after Wall Street crashed our economy, President Donald Trump's bank cops at the Federal Reserve are proposing to remove even more safeguards than directed by the dangerous law that the Republican-controlled Congress approved."
—Bartlett Naylor, Public Citizen
"Today's actions by the Fed are as unjustified as they are unwise," Dennis Kelleher, president and CEO of Better Markets, said in a statement. "Deregulating some of the largest banks in the country will make the financial system less safe, less stable, and less protected from another crash."
Noting that the nation's largest banks have been raking in record profits since the passage of the Republican tax plan last year, Kelleher argued that the Fed is "needlessly gambling with taxpayers' money."
Under the Fed's plan—which the Wall Street Journal called "one of the most significant rollbacks of bank regulations since Trump took office"—banks that have between $250 billion to $700 billion in assets would face far less stringent regulations than even the GOP-controlled Congress backed in March.
Additionally, as CNN reports, "institutions that have assets between $100 billion and $250 billion will no longer have meet two liquidity buffers, meaning they won't have to hold assets they can sell quickly for cash, and would only be subject to the Fed's stress test exercise every two years."
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"Banks with $250 billion in assets are systemically significant," Bartlett Naylor, financial policy advocate with Public Citizen's Congress Watch Division, noted in a statement. "Collectively, they control a quarter of all the industry's assets. Failure by several of these large, regional firms would spark economic mayhem, especially in America's heartland where most of them operate."
Which banks does the Fed want to start deregulating? It's not the small community banks, no, it's some of the big Wall St banks (many of which received a taxpayer bailout just 10 yrs ago).
— Better Markets (@BetterMarkets) October 31, 2018
"Ten years after Wall Street crashed our economy, President Donald Trump's bank cops at the Federal Reserve are proposing to remove even more safeguards than directed by the dangerous law that the Republican-controlled Congress approved earlier this year," Naylor concluded. "Banks may falter after their loans go bad, but when they can't find the cash to pay their own bills, they die and leave economic wreckage in their wake."