Warren cautions Powell on potential weakening of Basel III Endgame regulations

Federal Reserve Chair Accused of Prioritizing Financial Industry Over Capital Regulations

Sen. Elizabeth Warren, D-Mass.

Sen. Elizabeth Warren, D-Mass., is calling out Federal Reserve Chair Jerome Powell for potentially favoring the financial industry over proposed changes to regulations aimed at increasing the capital reserves of large U.S. banks.

In a letter dated June 17 and obtained by CNBC, Warren expressed concern over reports suggesting that Powell may be advocating to halve the required capital increase under the Basel III Endgame proposals after meeting with CEOs of major banks.

Warren criticized these potential actions, stating, “I am disappointed by press reports indicating that you are personally intervening—after numerous meetings with big bank CEOs—to delay and water down the Basel III capital rules.”

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The Basel III Endgame proposals were introduced last year by three U.S. banking regulators, including the Federal Reserve, to enhance capital requirements and address risky activities within the banking sector, aligning with international standards established in response to the 2008 financial crisis.

Warren emphasized the importance of these regulations, especially in light of recent bank failures and economic uncertainties. However, bank executives and industry groups have argued that the proposed increases are overly stringent and could restrict lending activities.

Earlier this year, Powell hinted at potential modifications to the Basel III rules following industry pushback. Reports indicated that JPMorgan Chase CEO Jamie Dimon played a role in lobbying for changes to the regulations, prompting Warren to accuse Powell of catering to industry demands.

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Warren urged Powell to adhere to the original Basel proposal, calling for a Federal Reserve Board vote on a 16% capital increase by the end of the month to prevent another financial crisis. The looming U.S. elections add urgency to finalizing these rules before a potential shift in leadership.

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