For Immediate Release
Trump’s Bank Cops Roll Back Safeguards
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division
WASHINGTON - Note: Today, the Federal Reserve Board proposed reducing safeguards for large banks following congressional approval earlier this year of a major banking deregulation law, S. 2155. Only one member on the board, Obama appointee Gov. Lael Brainard, opposed many of the proposals.
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.
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. That’s why large banks are required to have a certain amount of easily sellable liquid assets in case they run into trouble. The Fed’s proposal would lower the requirements at banks worth up to $700 billion.
The proposal also would reduce stress testing for banks as large as $250 billion in assets, tests which are important to make sure these firms have enough capital to survive tough times. Banks with $250 billion in assets are systemically significant. 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.
Public Citizen applauds Gov. Lael Brainard for opposing this misguided deregulation. As she observed, tougher bank rules haven’t stunted growth; on the contrary, they’ve helped stabilize the financial sector and made it a more productive part of the economy.
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