Elizabeth Warren calls Fed chair ‘dangerous man’ for supporting these reduced bank controls
Earlier today the Federal Reserve Board’s vice-chair of supervision, Michael Barr, unveiled sweeping changes to a proposal that would change the way banks protect their customers in the event of a meltdown, cutting the proposed increase in capital they must keep on hand by half.
Bank lobbying groups immediately responded with cautious optimism, though they have stated the industry would prefer no increase in capital requirements at all. But not everyone is pleased.
On Tuesday, progressive Senator Elizabeth Warren (D-MA) repeated her claim from three years ago that “Fed Chair Powell is a dangerous man whose actions make our banking system less safe.”
“The revised bank capital standards are a Wall Street giveaway … increasing the risk of a future financial crisis and keeping taxpayers on the hook for bailouts,” said Warren in a statement. “After years of needless delay, rather than bolster the security of the financial system, the Fed caved to the lobbying of big bank executives.”
The initial proposal unveiled last year would have increased capital requirements of banks larger than $250 million by 19%—money that would otherwise be available to invest in other projects or loaned out to businesses and individuals. The new proposal would increase requirement by only nine percent.
Warren initially called Powell dangerous in 2021 in the build up to his eventual renomination as the chair of the Federal Reserve, warning against what she considers a lax history of overseeing U.S. banks. In August she released a statement urging the Federal Reserve to finalize the initial so-called Basel III endgame, which reflects measures proposed by regulators to forestall a repeat of the 2008 financial crisis.
The changes Barr proposed today now need to be opened for comment, and could face another round of modifications before they’re implemented.
