This week, 19 members of Congress demanded the Federal Reserve maintain strong capital requirements for Global Systemically Important Banks.
Ranking Member of the House Committee on Financial Services Maxine Waters, D-Calif., and Ranking Member of the House Committee on Financial Services Subcommittee on Terrorism and Illicit Finance Ed Perlmutter, D-Colo., led the charge.
In a letter addressed to Federal Reserve Chairman Jerome Powell, the congressmen call into question Federal Reserve Vice Chair for Supervision Randal Quarles request to weaken capital requirements due to concerns of “unwarranted capital burdens.”
In the letter, Democrats highlighted evidence that indicated that high capital standards and regulatory improvements have strengthened the financial system since the financial crisis.
“Strong capital requirements are the cornerstone of an effective regulatory regime that promotes financial stability while supporting stable economic growth,” the members stated. “The financial crisis a decade ago taught a painful lesson about how damaging an undercapitalized financial system can be – a recent Federal Reserve study estimated the crisis cost every American about $70,000. Thus, we urge the Federal Reserve not to forget that costly lesson and maintain the appropriately tough capital requirements on G-SIBs."
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