Warren warns Powell against weakening Basel III Endgame regulations

“I am disappointed by news reports indicating that, after numerous meetings with the CEOs of large banks, you are personally intervening to delay and relax Basel III capital rules,” said Warren, D-Mass.

Last year, three U.S. banking regulators, including the Federal Reserve, unveiled proposed rules, a long-awaited regime change on bank capital and risky activities such as trading and lending. The regulations take into account new international standards created in response to the 2008 global financial crisis.

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

Bank presidents and their lobbying groups said the increases were unnecessarily aggressive and would force the industry to limit lending.

In March, Powell told lawmakers he expected “broad and significant changes” to the proposal following an industry campaign against the regulations. As the Wall Street Journal reported last month, JPMorgan Chase CEO Jamie Dimon coordinated efforts to weaken the rules, urging CEOs to address Powell directly.

“You now appear to be directly doing the bidding of the banking industry by rewarding them for their extensive, personal lobbying of you,” Warren said in her letter. “Taking orders from the industry that caused the economic crash of 2008 would sacrifice the financial security of the middle class and working families to line the pockets of wealthy investors and CEOs.”

She then criticized Powell, saying the Fed-led “regulatory rollback” allowed a regional banking crisis in 2023 and “enriched Jamie Dimon and his Wall Street cronies.”

Warren urged Powell to allow the Federal Reserve Board to vote on Basel’s original, tougher proposal by the end of this month. The window to finalize and approve the regulations before the November U.S. elections is closing, and analysts say the proposal could be delayed or invalidated if Donald Trump is re-elected president.

“Instead of following Mr. Dimon’s orders, you should do your job and allow the board to convene by June 30 to vote on a 16% capital increase because global regulators have deemed it necessary to prevent another financial crisis,” he said Warren.

The Fed did not immediately respond to a request for comment on Warren’s letter.