Regulation? Big Banks say they’re rock solid.

January 22, 2024
1 min read

TLDR: Big banks in the US are pushing back against a proposal requiring them to hold more capital to protect against potential future financial crises. The proposal, put forward last year by three federal agencies, aimed to ensure that if banks faced financial difficulties, they would not have to drastically cut lending or seek a bailout from taxpayers. However, a lobbying campaign by the banks and their allies appears to be succeeding in softening the proposal. Economists and scholars are critical of the banks’ resistance, arguing that additional regulations would make the financial system safer and more resilient. This disagreement has seen a surprising division among political lines, with some liberals siding with the banks, claiming that stricter regulations would limit lending to vulnerable populations. On the other hand, scholars from across the ideological spectrum support the proposal, arguing that stronger regulations would actually enable banks to continue lending even during economic downturns. Critics of the banks’ arguments accuse them of prioritizing their own interests over the well-being and stability of the financial system.

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