April, 14 2020, 12:00am EDT
Environmental Groups Applaud Legislation from Reps. Garcia and Porter to Increase Oversight on Major Financial Institutions
Today, Representatives Jesus "Chuy" Garcia (IL-04) and Katie Porter (CA-45) introduced the Systemic Risk Mitigation Act, which aims to prevent deregulation of the financial sector from putting the entire economy at risk, especially during the health and economic crisis caused by COVID-19.
WASHINGTON
Today, Representatives Jesus "Chuy" Garcia (IL-04) and Katie Porter (CA-45) introduced the Systemic Risk Mitigation Act, which aims to prevent deregulation of the financial sector from putting the entire economy at risk, especially during the health and economic crisis caused by COVID-19.
The bill would automatically designate shadow banks above a certain size as "systemically important," subjecting them to strong capital and liquidity rules, annual stress tests, living wills requirements, and other crucial safeguards. It would also create a Climate and Risk Subcommittee of the Financial Stability Oversight Council (FSOC) to assess the risk posed by climate factors to the stability of the U.S. financial system.
Members of the BlackRock's Big Problem campaign said:
"As we recover from the devastating impacts of the COVID-19 pandemic, it's critical that we protect our communities and our economy from future shocks to the system driven by climate change," said Sierra Club campaign representative Ben Cushing. "That means we must strengthen the resilience of the financial system by increasing oversight of large financial institutions from the financial risks of climate change, as well as the risks they create with their investments in the drivers of climate change."
"BlackRock is the perfect example of the shadow banks that need additional oversight and regulation. It is the world's largest asset manager, and in just the last few weeks has further consolidated its power and reach by contracting with both the U.S. government and the E.U. to oversee major financial programs. It is absurd for BlackRock to have that much financial power and leverage without the designation and oversight of being deemed systemically important," said Pete Sikora, Climate Campaigns Director, New York Communities for Change (NYCC)
Background
During the last financial crisis BlackRock stepped in to support the Fed's bailout; a role that many critics argued gave BlackRock too cozy of a relationship with Washington. In the years following the financial crisis, BlackRock grew its lobby efforts and famously avoided stronger regulatory oversight and designation. The company has ballooned since 2008.
As of January, BlackRock managed more than $7 trillion. In its role managing the Fed corporate debt program, BlackRock will now manage another $750B on behalf of US taxpayers.
The Sierra Club is the most enduring and influential grassroots environmental organization in the United States. We amplify the power of our 3.8 million members and supporters to defend everyone's right to a healthy world.
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The Wall Street Journalreported Thursday that members of Trump's transition team and the new Elon Musk-led Department of Government Efficiency have asked nominees under consideration to head the FDIC and OCC if the bank watchdogs could be eliminated and have their functions absorbed by the Treasury Department, which is set to be run by a billionaire hedge fund manager and crypto enthusiast.
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