Earlier today, Michael Barr, vice chairman of the Federal Reserve Board’s regulator, unveiled sweeping changes to a proposal to alter the best way banks protect customers within the event of a meltdown, cutting by half the proposed increase in the quantity of capital they need to hold.
Bank lobby groups must immediately replied with cautious optimism, although they’ve stated that the industry would like no increase in capital requirements in any respect. But not everyone seems to be completely satisfied.
On Tuesday, progressive Senator Elizabeth Warren (D-MA) reiterated her claim from three years ago that “Fed Chairman Powell is a dangerous man whose actions are making our banking system less safe.”
“The revised capital standards for banks are a gift to Wall Street … they increase the risk of a future financial crisis and leave taxpayers footing the bill for bailouts,” Warren said in a press release. “After years of unnecessary delays, instead of strengthening the safety of the financial system, the Fed has caved in to lobbying by big bank executives.”
The original proposal from last 12 months would have increased the capital requirements of banks with capital over $250 million by 19 percent – money that may otherwise be available for investments in other projects or as loans to businesses and individuals. The recent proposal would increase the requirement by only 9 percent.
Warren initially called In 2021, Powell warned against what she sees as a lax history of oversight of US banks ahead of her reappointment as chair of the Federal Reserve. In August, she published a opinion They urged the Federal Reserve to finish the so-called Basel III endgame, which summarizes the measures proposed by regulators to forestall a repeat of the 2008 financial crisis.
The changes proposed by Barr today must now be submitted for comment and will undergo one other round of changes before they’re implemented.
