Sen. Warren warns Powell against weakening banking regulations: ‘Do your job’

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Sen. Elizabeth Warren is accusing Fed Chair Jerome Powell of doing the financial industry’s bidding in considering changes to Basel III Endgame regulations. In a letter first obtained by CNBC, Warren asked Powell for a response to reports that “you are advocating for slashing in half” the increase in capital required under the proposals. Bank CEOs and their lobbying groups have said the increases are unnecessarily aggressive and would force the industry to curtail lending.

Sen. Elizabeth Warren, D-Mass., is accusing Federal Reserve Chair Jerome Powell of doing the financial industry’s bidding by considering changes to a sweeping set of regulations aimed at boosting the capital cushion that large American banks would be required to hold.

In a June 17 letter first obtained by CNBC, Warren asked Powell for a response to reports that “you are advocating for slashing in half” the increase in capital required under the proposals, known as the Basel III Endgame.

“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,” said Warren.

Last year, three U.S. banking regulators including the Federal Reserve unveiled the proposed rules, a long-expected regime shift around bank capital and risky activities such as trading and lending. The regulations incorporate new international standards created as a response to the 2008 global financial crisis.

“These rules are critical and long overdue, particularly in the wake of the Silicon Valley and Signature Bank failures, and as risks from the weak commercial real estate market and other economic threats ripple through the banking system,” Warren said.

Bank CEOs and their lobbying groups have said the increases are unnecessarily aggressive and would force the industry to curtail lending.

In March, Powell told lawmakers that he expected “broad and material changes” to the proposal in the wake of the industry’s campaign against the rules. JPMorgan Chase CEO Jamie Dimon coordinated efforts to weaken the rules, urging CEOs to appeal directly to Powell, The Wall Street Journal reported last month.

“It now appears that you are directly doing the bank industry’s bidding, rewarding them for their extensive personal lobbying of you,” Warren said in her letter. “Taking orders from the industry that caused the 2008 economic meltdown would sacrifice the financial security

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The full article is available here. This article was published at CNBC Finance.