“Regulators need to catch up to the reality that the growth and concentration of the asset management industry has fundamentally reshaped how public companies — including listed banks — make decisions,” said Natalia Renta, a senior policy counsel at the Americans for Financial Reform Education Fund.
Today, 38 labor unions, investors, and advocates submitted a letter to the Federal Deposit Insurance Corporation (FDIC) in support of a proposed rule that would increase oversight of asset managers with substantial voting power in banks. The proposal would bolster FDIC oversight when asset managers gain control of over 10 percent of voting securities of bank holding companies with FDIC-supervised subsidiaries.
AFREF authored a memo endorsed by nine partner organizations, which highlights opportunities for financial institutions to mitigate climate-related financial risk in a way that doesn’t violate fair lending and supports communities while building resilience through Community Reinvestment Act (CRA) and Inflation Reduction Act (IRA) opportunities.
AFR and coalition members signed onto a letter urging the Senate to support the nomination of Christy Goldsmith Romero to be Chair and Member of the Federal Deposit Insurance Corporation. Goldsmith Romero led the office of the Special Inspector General for the Troubled Asset Relief Program and has decades of experience regulating financial institutions and markets, broad and deep knowledge of the financial system, and a record of commitment to the public interest.
The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) voted to propose a rule implementing an important statutory mandate to ban incentive-based executive compensation that encourages reckless risk-taking, but two other regulators – the Federal Reserve and the Securities and Exchange Commission – have yet to do the same. Congress tasked six agencies with promulgating this critical rule when it passed the Dodd-Frank Act in 2010. But only four out of the six were part of today’s proposal — the FDIC, the OCC, the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA).
The President has made it clear: it’s time to fight consolidation, not facilitate it. In reviewing lessons learned from this most recent banking crisis to better prevent the next one, the regulators must be full-throated and clear in their affirmation that robust regulation and competition, not consolidation, will lead to a healthier, safer, and more vibrant financial system. Banks must exist to serve the needs of the American people, not the other way around – and it is regulators’ critical task to ensure so.
AFREF, the Institute for Policy Studies, Global Economy Project, and Public Citizen led a letter with 22 additional signatories to the agencies tasked with implementing section 956 of Dodd-Frank. That section tasked six agencies with promulgating regulations to prevent incentive-based executive compensation that encourages “inappropriate risk” by May 2011. Almost 12 years later, we don’t have a final rule. The letter was sent to regulators ahead of congressional hearings that will examine recent bank failures.
Today, a broad coalition of financial services and consumer organizations expressed support for new legislation to close the industrial loan company (ILC) charter loophole, the “Close the Shadow Banking Loophole Act.” The legislation, introduced by Senate Banking Committee Chairman Sherrod Brown (D-OH), Sen. Bob Casey (D-PA) and Sen. Chris Van Hollen (D-MD), prohibits shadow banks and nonbank commercial entities from taking advantage of legal loopholes. These loopholes allow these companies to control a full-service FDIC-insured depository institution without being subject to the comprehensive set of rules designed to keep the financial system safe.
AFR joined a joint coalition made up of consumer advocates and bank trade groups on this letter to Congress to express our support of the Close the Shadow Banking Loophole Act recently introduced by Senators Brown, Casey, and Van Hollen. This bill will close the Industrial Loan Company charter loophole that allows Big Tech and other large commercial firms from owning a bank without adequate oversight.
The Department of Justice upheld the rule of law in its recently published opinion on the ability of the chair of the Federal Deposit Insurance Corporation to block votes sought by the majority of its board.