Despite the known fact that the capital of the London and Wall Street megabanks was overwhelmed by their losses, which had to be bailed out by the U.S. Treasury in the 2007-08 global financial crash, the Federal Reserve has now dramatically reduced the capital requirements for U.S. banks required in the so-called Basel Final Rule. Fed Chair Jerome Powell palpably capitulated to JPMorgan Chase and Wall Street, and to Republican mouthpieces for Wall Street in the Congress.
Federal Reserve Vice Chair for Supervision Michael Barr announced the new bank capital requirements on Sept. 10. They changed what was planned, though the international regulatory forum of the Basel Financial Services Board, to be a required capital increase of the largest banks to 15% of their assets (according to their own computer models for “weighting” those assets). Instead, the Fed’s version of the Final Rule will require an increase only to 8% and that over yet another five-year period. Major U.S. regional banks are given no new capital requirement, although it is only 18 months since several of those regionals had their capital overwhelmed by losses and bank runs, and failed/were bailed out.
“Federal Reserve Unveils Toned-Down Banking Regulations in Victory for Wall Street” is the headline of CNBC’s report Sept. 10. After announcing “public comment period” on the Basel Final Rule proposal in July 2023, the Federal Reserve had been unilaterally consulting with Wall Street banks, and eventually dramatically reduced it, excluding other U.S. regulatory bodies from the process, although the FDIC and OCC went along with Barr’s announcement Sept. 10.
