Senator Elizabeth Warren of Massachusetts has accused Federal Reserve Chair Jerome Powell of advocating for changes to banking regulations that would benefit the financial industry. In a letter obtained by CNBC, Warren expressed her disappointment with Powell’s alleged efforts to delay and weaken capital requirements for large American banks.
The proposed changes to the Basel III regulations, first unveiled by three U.S. banking regulators including the Federal Reserve, aim to increase the capital cushion that banks must hold. These rules are a response to the 2008 global financial crisis and are considered critical and long overdue by Warren, particularly in light of recent bank failures and economic threats.
Bank CEOs and their lobbying groups have pushed back against the proposed increases in capital requirements, arguing that they are overly aggressive and would lead to a reduction in lending. Jamie Dimon, the CEO of JPMorgan Chase, has reportedly coordinated efforts to weaken the rules and lobby Powell directly on behalf of the industry.
Senator Warren has criticized Powell for allegedly doing the bidding of the banking industry and rewarding them for their lobbying efforts. She has accused Powell of sacrificing the financial security of middle-class and working families in order to benefit wealthy investors and CEOs. Warren also pointed to regulatory rollbacks under Powell’s leadership as contributing to the regional banking crisis of 2023.
Warren has urged Powell to allow a Federal Reserve Board vote on the original, stricter Basel proposal by the end of the month. With the U.S. elections approaching, Warren has expressed concern that the proposal could be delayed or abandoned if President Trump is reelected. She called on Powell to prioritize the safety and stability of the financial system by upholding the proposed 16% capital increase recommended by global regulators.
Senator Elizabeth Warren’s accusations against Federal Reserve Chair Jerome Powell highlight the ongoing tension between regulatory oversight and industry interests in the banking sector. Powell’s alleged actions to delay and weaken capital requirements have raised concerns about the potential impact on financial stability and the economy as a whole. It remains to be seen how Powell will respond to Warren’s call for a vote on the Basel III proposal and whether the industry’s influence will continue to shape banking regulations in the future.
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