(WASHINGTON, D.C.) - Representative Jamie Raskin (MD-08) joined 12 other Members of Congress in calling on the Federal Reserve Board to stop the series of recent alarming deregulatory decisions that disregard the potential consequences of imposing high levels of risk on the financial system.
In a letter directed at Chairman Jerome H. Powell and the Vice Chair of Supervision Randal K. Quarles, the Members expressed their alarm at the deregulatory decisions the Fed has made recently, including the failure to activate the Countercyclical Capital Buffer (CCyB). This is a requirement for large banks to hold higher amounts of capital at moments like the current one, when the economy is relatively healthy, bank profits are high, and risks to the financial system are elevated.
Last Monday, the Fed issued its financial stability report and admitted that there were high levels of corporate debt posing risks to the financial system. However, it failed to answer how it’s going to address this risk.
“I represent a district where thousands of residents have not recovered from the Great Recession. When the Federal Reserve disregards the risks the financial system is facing, it is pushes hard working Americans to the edge of an economic cliff. Congress empowered the Fed with regulatory tools to stabilize the financial system, insulate taxpayers from the effects of crashes and institute safeguards against Wall Street excess. We urge the Fed to use those tools and enact protections to prevent another crash,” said Rep. García.
“Working- and middle-class families were devastated by the Great Recession due to irresponsible actions by banks, while those very financial institutions were largely left off the hook. The proposed weakening of financial rules is yet another attempt by Trump officials to give Wall Street more power to make reckless decisions while every day residents are left vulnerable and on the hook to clean up their mess. This must be stopped,” said Rep. Tlaib.
The letter also echoes points made earlier this week by former Federal Reserve Chairs Ben Bernanke and Janet Yellen and former Treasury Secretaries Tim Geithner and Jacob Lew, who warned against a number of deregulatory moves issued recently by the Financial Stability Oversight Council (FSOC), which includes Chair Powell. Bernanke, Yellen, Geithner, and Lew warned about the dangerous decision by FSOC to make it more difficult to designate non-banks as systemically important financial institutions.
The letter is being sent in advance of testimony by Vice Chair Quarles before the Financial Services Committee scheduled for May 16.
A signed copy of the letter is available here.