” ‘The Volcker Rule And Market Making In Times of Stress’ paper does not represent the official view of the Federal Reserve, and is not a Federal Reserve Report. …It is simply false to present this paper as demonstrating that the Volcker Rule has created market costs that exceed its risk reduction benefits.”
AFR in the News: Coalition of Unions, Consumer Groups Press Regulators on Bank “Living Wills” (Wall St. Journal)
“Tuesday’s letter to the Fed and FDIC from Americans for Financial Reform… is the latest evidence that the agencies could face some backlash if their verdict is favorable to the industry. The coalition includes large unions and public interest groups with powerful pull in Washington… The coalition asks that regulators, if they decline to find banks’ plans not credible, provide the public with a detailed explanation of improvements banks have made in the living wills since the firms failed to pass regulatory muster in 2014.”
“AFR sent a letter to banking regulators today concerning their review of bank resolution plans. The Dodd-Frank Act requires regulators to review these plans to ensure that major banks are no longer ‘too big to fail’ – that they can go through a conventional (Chapter 11) private bankruptcy in an orderly manner, without creating substantial economic disruption. “
“Americans for Financial Reform stated that the bill is ‘fundamentally misconceived: while its proponents claim to be focused on the needs of small community banks, the substance of the bill reads more like a deregulatory wish list for big banks and other large financial players.’ AFR stated that a ‘disturbing number of lawmakers are once again willing to act as shills for Wall Street and its discredited deregulatory agenda,’ adding that it’s ‘unlikely that this dangerous bill or anything like it will become law.’”
AFR provided comments to the Federal Reserve on a proposal to require more capital for the largest banks. While supporting the idea of additional capital for these banks, AFR’s comment criticized the level as too low.
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.”