Elizabeth Warren accuses Federal Reserve Chair of doing banking industry’s bidding
Senator Elizabeth Warren accuses Federal Reserve Chair Jerome Powell of doing the bidding of the banking industry by advocating for “slashing” capital requirements under new regulations known as Basel III. Warren alleges that Powell’s actions could sacrifice the financial security of middle-class and working families to benefit wealthy investors and CEOs.
In a letter obtained by CNBC, Warren expressed disappointment in Powell’s reported interventions to delay and weaken the Basel III capital rules after meetings with big bank CEOs. She highlighted Powell’s recent testimony before Congress, where he suggested abandoning the rules entirely as a “plausible option,” and cited a Wall Street Journal article detailing personal lobbying meetings with J.P. Morgan Chase CEO Jamie Dimon and other banking executives.
Warren emphasized that Powell had initially supported the rules agreed upon by global financial regulators in July 2023 following a series of bank failures. However, the Wall Street Journal article suggested that the required capital increases for large banks could be significantly reduced under the new proposals.
The senator urged Powell to allow the Federal Reserve Board to vote on the originally proposed 16% percent increase by June 30th. Concerns have been raised about finalizing and approving the rules before the November election, with analysts suggesting that the implementation could be delayed or halted entirely if Donald Trump wins the election.
A Federal Reserve spokesperson confirmed that Warren would receive a response to her letter. Banks and their lobbying organizations have criticized the rules as unnecessarily aggressive, claiming they could lead banks to reduce lending.
The ongoing dispute between Warren and Powell highlights the complex relationship between financial regulators, the banking industry, and the impact of regulatory decisions on the broader economy. Stay tuned for updates on this developing story.
