This conference, co-sponsored by Americans for Financial Reform, the Economic Policy Institute and the Roosevelt Institute, featured keynote speeches by Senator Elizabeth Warren and economist and N.Y. Times columnist Paul Krugman.
“Mandatory margin requires participants in the swaps market to take full account of the risks of their derivatives transactions and provide some level of advance provisioning for such risks. The availability of properly segregated margin is clearly of enormous value in case of the default of a swaps counterparty.”
“Under pressure to show that it is up to the task of regulating giant Wall Street firms, the Federal Reserve issued a surprise announcement on Thursday that it would review crucial aspects of its bank supervision. The Fed asked its inspector general to look into whether top supervisors were getting the information they needed to make their decisions. The Fed also said it wanted the inspector general to determine if top officials were hearing all the opinions of Fed bank examiners.”
“There are really two elements to this story,” Marcus Stanley of Americans for Finance Reform said. “One is the internal Federal Reserve self-evaluation… that did say that Federal Reserve supervisors tended to be overly deferential to the banks that they supervise [and] tended to be reluctant to take action and reluctant to raise strong criticisms. And then… you get these tapes made by Carmen Segarra which appear to show this exact sort of deferential behavior.”
“A bipartisan group of 15 legislators… has released a letter calling for stronger limitations on the use of Federal Reserve emergency lending powers. The Dodd-Frank Act mandated new limits on such emergency lending. Today’s letter strongly criticizes the Federal Reserve’s proposal to implement these new limits, saying that the proposal places ‘no meaningful restrictions’ on lending powers and leaves the door open to a future ‘backdoor bailout’ of Wall Street. AFR welcomes this letter and applauds the efforts of legislators to address this issue.”
“Americans for Financial Reform supports the separation of banking and commerce as a foundational principle, motivated both by considerations of preserving fairness in competition with non-bank firms who do not have access to the prudential safety net, and by considerations of financial safety and soundness.”
“We don’t believe that this is enough,” Marcus Stanley of Americans for Financial Reform told the Washington Post. “Raising $60 billion in extra capital is helpful, but it’s really not in line with the kinds of risk we saw in the financial crisis.”
“The 2010 Dodd-Frank financial reform law required the Fed to restrict its emergency lending powers so that too-big-to-fail banks don’t expect the central bank to dole out easy money again in the event of another financial crisis,” writes Erika Eichelberger of Mother Jones. Three years later, the Fed has come out with a draft rule that “misses the mark,” interpreting “the statute in ways that minimize limits on emergency lending authority.”
“We applaud the Senate’s confirmation of Janet Yellen as chair of the Federal Reserve Board. Americans for Financial Reform and our allies have been heartened by Yellen’s strongly expressed commitment to the Fed’s mission as a financial regulator and to an economy that works for ordinary people. Getting financial regulation right will be crucial to the realization of that goal.”
“The OCC and FDIC got it right in standing up for borrowers who have been taken advantage of,” said Lisa Donner, AFR’s Executive Director. “Now it’s up to the Federal Reserve to follow the OCC’s and FDIC’s lead with the institutions it regulates.”