Senate Democrats on Thursday warned regulators against allowing big banks to grow even bigger, saying the trend was posing a threat to the financial system.
New regulations to police the industry could backfire by undermining smaller lenders, Sen. Jon Tester of Montana cautioned, pointing to rules developed in the aftermath of the 2008 global financial crisis.
“In 2008…we railed on regulators, we railed and railed and railed, because they didn’t do their job, and you know what they ended up doing? They ended up regulating the hell out of the banking industry to the point where we made the bigger banks bigger,” Tester said during an oversight hearing the Senate Banking Committee held with top regulators.
“Regulations need to fit the risk,” Tester said. “My concern is that these community banks that don’t have a risky portfolio will end up paying the price.”
Federal Reserve Vice Chair for Supervision Michael Barr has said he's looking at toughening rules for larger regional banks.
Sen. Elizabeth Warren (D-Mass.) noted that the nation’s largest bank, JPMorgan Chase, has already gotten bigger as a result of the recent banking crisis after regulators approved a deal this month to let the megabank purchase First Republic Bank’s assets.
Warren scolded Acting Comptroller of the Currency Michael Hsu for permitting the deal.
“Your job, by law, is to determine risk to the system from making big banks even bigger,” she said. “Did you just ignore the fact that a failure at JPMorgan would blow a hole in our banking system…and let them grow by $200 billion?”
Hsu said he had to “take into account a range of factors” other than size when evaluating the deal.
Other potential buyers would have presented less of a threat, Warren said.
“The single biggest threat to the U.S. banking system is concentration,” Warren added. “You chose the one that gives us more concentration in the system. I am very troubled by that decision.”
from Politics, Policy, Political News Top Stories https://ift.tt/klqhYzU
via IFTTT
0 comments:
Post a Comment