In a move policy analysts and progressives warned could drastically increase the risk of another financial collapse, two Democratic regulators appointed by Senate Minority Leader Chuck Schumer (D-N.Y.) joined their GOP colleagues in pushing the Federal Reserve to weaken safeguards that limit Wall Street’s dangerous gambling.
“At issue is the supplementary leverage rule, which was adopted in the aftermath of the 2008 collapse as a last line of defense against financial excess,” HuffPost‘s Zach Carter reported Tuesday. “Four out of five top officials at the Commodity Futures Trading Commission want the Fed to lower leverage requirements by changing the way the officials treat derivatives.”
Rep. Katie Porter (D-Calif.), a member of the House Financial Services Committee and a banking regulation expert, condemned the plan to gut post-crisis protections as “another example of Trump regulators listening to Wall Street’s wish list.”
“Between this, the banking deregulation bill passed last year, and other changes proposed by the Fed and [Office of the Comptroller of the Currency],” Porter added, “we can expect Too Big to Fail banks to get riskier and have less of a cushion to guard taxpayers from bailouts.”
The plan to weaken post-crisis leverage requirements on the nation’s six largest banks—backed by Schumer appointees Rostin Behnam and Dan Berkovitz—was presented to the Fed last month, according to HuffPost.
Gregg Gelzinis, a policy analyst at the Center for American Progress told HuffPost that the proposal would “only increase the likelihood of another crash.”
Lower leverage requirements = bigger exposure to financial crisis. Pretty straightforward as bank rules go.— Zach Carter (@zachdcarter) March 19, 2019
In short, Dodd-Frank is about to be weakened *at the top of the credit cycle* and Democrats will have helped to weaken it.— Zach Carter (@zachdcarter) March 19, 2019
The latest bipartisan deregulatory push comes just months after Democrats in Congress helped Republicans ram through legislation that significantly weakened the Dodd-Frank Act on the anniversary of the 2008 Wall Street collapse.
“We are barely a decade from the greatest fiasco of financial over-leveraging in history, and we are already unlearning its most obvious lessons,” tweeted David Adler, policy analyst at DiEM25.
If you liked this article, please donate $5 to keep NationofChange online through November.