By Pam Martens and Russ Martens: March 7, 2024 ~
Senator Elizabeth Warren
Engaged Americans are watching in real time a replay of how Wall Street mega banks in 2008 created the worst financial collapse since the Great Depression, then used their campaign money and lobbying clout to intimidate Congress and the Obama administration into passing the pathetically watered down financial “reform” legislation known as Dodd-Frank in 2010.
The Fed has been bailing out the mega banks’ excesses and casino style of banking ever since.
The same dynamic is playing out today with the proposal by three federal banking regulators (the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency and the Federal Reserve) to strengthen the capital requirements on the 37 largest banks in the U.S. – less than one percent of all banks in the U.S.
For important background on the capital proposal, see our reports below:
Jamie Dimon Hires Dodd-Frank Hatchet Man to Weigh Suing the Fed Over Proposed Capital Rules
Yesterday, heads exploded at bank watchdog groups when Fed Chair Powell testified before the House Financial Services Committee and stated that the higher capital proposal submitted by the three federal banking regulators last July was going to receive “material and broad changes.”
Today, Powell appeared before the Senate Banking Committee for his regularly scheduled Semiannual Monetary Policy Report. After Republicans on the Committee gushed over Powell’s willingness to rethink, redraft or repropose the capital rules, it came time for Senator Elizabeth Warren to question Powell. When it comes to Wall Street banks and their history of looting the public, as well as the public purse, there is no one more knowledgeable or engaged in Congress than Senator Warren.
Warren is no fan of Jerome Powell to begin with. But today, she was particularly incensed that after Powell had promised last year to support the Fed’s Vice Chair for Supervision, Michael Barr, in making reforms to prevent more bank runs and systemic contagion as occurred in the spring of last year, Powell was now caving to pressure from the banking industry.
Senator Warren said the 37 largest banks that would be impacted by the higher capital rules have “spent tens of millions of dollars running ads during Sunday night football and millions more for an army of lobbyists to try to twist arms here in Congress.”
The TV ads have been grossly misleading, making it sound like the higher capital requirements at just 37 banks would hurt working families and farmers – ignoring that inadequate capital levels collapsed giant Wall Street banks in 2008 and put millions of innocent Americans out of work and in foreclosure as the U.S. economy collapsed along with the toxic debt bombs exploding at the banks.
Warren said this to Powell today: “Despite all you said last year when the banks failed about supporting Vice Chair Barr’s recommendations to strengthen rules for big banks, public reporting now says that you are driving efforts inside the Fed to weaken the capital rule. You even told the House Financial Services Committee representatives yesterday that you think it’s ‘very plausible’ that you withdraw the rule.”
Warren concluded with this:
“You are the leader of the Fed and when the heat was on last year, you talked a lot about getting tougher on the banks. But now the giant banks are unhappy about that and you’ve gone weak-kneed on this. The American people need a leader at the Fed who has the courage to stand up to these banks and protect our financial system.”
Warren voted against Powell’s reappointment as Fed Chair and it seems clear that she would register a no vote if he is renominated as Fed Chair. Powell’s current term as Chair expires on May 15, 2026.
