Katie Britt questions top bank about economic consequences of the Biden Administration’s Basel III Endgame Proposal
On Wednesday, U.S. Senator Katie Britt (R-Alabama) participated in a Banking, Housing, and Urban Affairs Committee hearing featuring testimony from the CEOs of the eight globally systemic banks (G-SIBs) in the United States. The witnesses were Charles Scharf of Wells Fargo, Brian Moynihan of Bank of America, Jamie Dimon of JPMorgan Chase, Jane Fraser of Citigroup, Ronald Hanley of State Street, Robin Vince of BNY Mellon, David Solomon of Goldman Sachs, and James Gorman of Morgan Stanley. Britt asked Wells Fargo’s Scharf whether the Basel III Endgame proposed rule, recently issued jointly by three federal banking regulators, would affect lending at rural bank branches, especially given that over 42% of residents in Alabama live in rural areas. “Well, Senator, we are going to be commenting to the Federal Reserve,” Scharf said.“We do think there are a series of asset classes, when you look at the increases in capital that are proposed, [that] would affect both the availability of credit and the pricing of credit in the marketplace. And additionally, as we’ve seen in other asset classes when regulation like this has taken hold, you can see substantial migration outside of the regulated banking system.” Britt asked Bank of America’s Moynihan, “Briefly explain this trickle-down effect, and if your banks are squeezed by the requirements of this rule, what does this ultimately mean for maybe small business owners seeking a loan, a first-time home buyer, or a small financial institution in, let’s say Alabama?” Moynihan responded, “Thank you, Senator. As Mr. Scharf said, and we talked about a lot today, if you have the same capital requirements increase by 20 percent to do the exact same activities you did yesterday, you have to get a higher return, and that higher return will be borne by the customer base, or you’ll have to leave the business. And either one of those is not good for the customer base, and it applies across the board.” “In fact, the idea that this doesn’t trickle down through the banking system. Overall, we provide services to a lot of those smaller banks, and those costs of those services will go up to them,” Moynihan added. “And, so, it has much more of an impact than people think.” “Would it be an inaccurate statement for regulators to assume that under this threshold, those under the hundred-billion-dollar asset mark, they have said, you know, they won’t feel the impacts of this?” Britt asked. “So, my question for you is, will those institutions and people and things that I just mentioned under the hundred-billion-dollar [asset] mark, that are quote, “not affected by this,” will they feel the impacts of Basel III? Just if we can ‘yes’ or ‘no’ down the line.” Scharf replied, “Ultimately, yes.” Moynihan answered by nodding his head in affirmation. Dimon answered, “Absolutely. You provide a lot of services.” Fraser replied, “Yes. The trickle-down effect is real.” Hanley said, “Yes. It’s an integrated system.” Vince replied, “Yes, Senator, that’s likely.” Solomon said, “Yes, I agree.” Gorman answered, “Yes.” Britt asked, “And last but not least, if this rule is implemented as written, do we risk putting the United States banking sector at a global competitive disadvantage? Mrs. Fraser, do you mind answering that?” “Yes, we will,” answered Citigroup’s Fraser. “We already have an unlevel playing field with the European banks. The American banks play an incredibly important role globally in the financial system and ultimately affect the competitiveness of American companies. This is important.” The Biden administration wants to raise the reserve capital requirements on large banks. Critics of this move are concerned that that will lead to fewer dollars available economy-wide to borrowers meaning higher interest rates and fewer American families and businesses having access to credit. Vice Chair for Supervision of the Federal Reserve Michael Barr told the committee that he believed the proposed rule would have a “minimal impact on lending.” Britt questions the need for the new proposal and worries about there being a trickle-down effect from this tightened regulation. “Over the last year, we have seen a host of incredibly complex and market-altering rules come out of nearly every financial federal agency,” Britt said. “Interestingly, five of our top financial regulators sat before this very committee last month and unanimously told me that they believed the U.S. banking system to be strong, while at the same time, they argued for proposals that could fundamentally weaken it without providing any adequate answer to the question, ‘Why?’” “At the end of the day, the G-SIBs play a vital role in the U.S. economy, and I don’t want to diminish that,” Britt said. “However, I do want to focus on downstream. So, impacts on, let’s say, Alabama’s smaller financial institutions, small businesses across the country, those in manufacturing and energy sectors, individuals seeking maybe a short-term liquidity, to help pay their bills. I think the list of these potentially impacted goes on and on and on and on. And on this point, your banks have said that by raising capital requirements by nearly 20 percent, the proposal would ultimately limit access to capital across the board and undermine economic growth.” “The rule assumes that banks are significantly undercapitalized for operational risk but yet cites no evidence to support this assumption,” Britt said recently of the proposed rules change. “Not only are these risks already accounted for in stress testing, but the new standardized approach is not tailored to the varying business models of various banks. Katie Britt was elected to the Senate in 2022. To connect with the author of this story or to comment, email brandonmreporter@gmail.com.
State AG coalition calling out Chase for religious discrimination
A group of attorneys general from across the U.S. is going after one of the country’s largest banks, which it claims treats some Christians unfairly. In a letter recently sent to JP Morgan Chase CEO Jamie Dimon, the groups said the bank preaches “openness and inclusivity,” but it has “persistently discriminated” against some religious liberty groups. “Chase cannot call itself ‘inclusive’ and say that it ‘opposes discrimination in any form’ while simultaneously disenfranchising its clients over religious and political differences,” Kentucky Attorney General Daniel Cameron, who took the lead in the effort, said. “I’m leading this coalition to stand up for Kentuckians.” In the eight-page letter, Cameron notes Chase “de-banked” the National Committee for Religious Freedom last year, with the group learning its account at a Chase branch in Washington, D.C., was canceled just a few weeks after it was created. The group said the financial institution offered to restore the account if it provided a list of donors, a list of political candidates it backed, and its rationale for endorsements. The NCRF was not alone in being excluded. Cameron also pointed to the pro-life Family Council had an account ended by a credit card processor Chase owned after it was determined to be a “high-risk” group. Meanwhile, Chase touts the scores and marks it received from groups like the Human Rights Campaign, which fights for LGBTQ+ rights. That shows a “concerning double standard,” Cameron said. “This pattern of discrimination means that many Kentuckians, and many residents of the states represented by the signatories to this letter, are at risk of being de-banked without notice or recourse,” said Cameron, a Republican who is running for the party’s gubernatorial nomination later this month. The letter calls on Chase to end discriminating against certain groups for their religious or political beliefs. One way it can show that is by participating in the National Center for Public Policy Research’s Viewpoint Diversity Score Business Index survey, which Cameron said measures “corporate respect for religious and ideological diversity.” Besides Cameron, the letter was also signed by attorneys general from Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, South Carolina, Texas, Utah, Virginia, and West Virginia. Republished with the permission of The Center Square.
Jared Kushner, taking new White House role, faces rare scrutiny
Jared Kushner has been a power player able to avoid much of the harsh scrutiny that comes with working in the White House. But this week he’s found that even the president’s son-in-law takes his turn in the spotlight. In a matter of days, Kushner, a senior Trump adviser, drew headlines for leaving Washington for a ski vacation while a signature campaign promise fell apart. The White House then confirmed he had volunteered to be interviewed before the Senate intelligence committee about meetings with Russian officials. At the same time, the White House announced he’ll helm a new task force that some in the West Wing have suggested carries little real influence. Kushner became the fourth Trump associate to get entangled in the Russia probe. North Carolina Sen. Richard Burr, the chairman of the intelligence committee, said Tuesday that Kushner would likely be under oath and would submit to a “private interview” about arranging meetings with the Russian ambassador and other officials. The news came as the White House announced Kushner would lead a new White House Office of American Innovation, a task force billed as a powerful assignment for Kushner. But the task force’s true power in the White House remained unclear, according to a half-dozen West Wing officials and Kushner associates who spoke on the condition of anonymity. The official White House line is that the group would have sweeping authority to modernize government, acting as strategic consultants who can draw from experiences in the private sector — and sometimes receive input from the president himself — to fulfill campaign promises like battling opioid addiction and transforming health care for veterans. White House press secretary Sean Spicer said Monday that it would “apply the president’s ahead-of-schedule-and-under-budget mentality” to the government. But others inside and outside the White House cast doubt on the task force’s significance and reach, suggesting it was a lower priority for the administration and pointing out that similar measures have been tried by previous presidents with middling success. The assignment revived lingering questions about whether Kushner had opted to focus his time on a project that would put him at some distance from some Trump’s more conservative and controversial policy overhauls. The announcement came just days after Kushner and his wife, Ivanka Trump, were photographed on the ski slopes of Aspen, Colorado, as the GOP health care deal began to unravel amid protests from conservative Republicans that it did not go far enough in replacing President Barack Obama‘s Affordable Care Act. Kushner rushed back to Washington on Friday but it was too late to save the bill, which was scuttled hours later by House Speaker Paul Ryan. Two people close to Kushner vehemently denied the president was upset at his son-in-law for being absent, saying Trump had given the trip his blessing. And a senior White House official insisted the timing of the task force announcement was planned weeks in advance. Kushner, who has been at his father-in-law’s right hand since the campaign, has long been viewed as a first-among-equals among the disparate power centers competing for the president’s ear. Kushner, who routinely avoids interviews, draws power from his ability to access Trump at all hours, including the White House residence often off-limits to staffers. His portfolio is robust: He has been deeply involved with presidential staffing and has played the role of shadow diplomat, advising on relations with the Middle East, Canada and Mexico. Though Kushner and Ivanka Trump have been spotted with some frequency on the Washington social circuit, the president’s son-in-law is routinely in the office early and leaves late, other than on Fridays when he observes the Sabbath. While those close to Trump flatly state that Kushner, by virtue of marriage, is untouchable, this is a rare moment when he has been the center of the sort of political storm that has routinely swept up the likes of White House chief strategist Steve Bannon, chief of staff Reince Priebus and senior counselor Kellyanne Conway. It points to a White House whose power matrix is constantly in flux. Kushner has been closely allied with senior counselor Dina Powell and National Economic Council director Gary Cohn, the former Goldman Sachs executive and a registered Democrat. That group has, at times, been at odds with conservatives led by Bannon, who to this point has been the driving force behind the White House’s policy shop. When Kushner officially joined the administration in January as a senior adviser, it was suggested that the real estate heir would draw upon the private sector to streamline and modernize government. His task force has been meeting since shortly after the inauguration and started talking to CEOs from various sectors about ways to make changes to entrenched federal programs. “Jared is a visionary with an endless appetite for strategic, inventive solutions that will improve quality of life for all Americans,” said Hope Hicks, Trump’s longtime spokeswoman. A list supplied by the White House of some of those who have met with Kushner reads like a who’s who of the American business world, including Microsoft co-founder Bill Gates, Tim Cook of Apple and Jamie Dimon of JPMorgan Chase. Kushner usually does more listening than talking in the meetings, largely avoiding ideological arguments while asking questions about efficiency and best practices, according to a person who has attended a gathering but is not authorized to discuss private conversations. But the Trump team is hardly the first seeking to improve how the government operates. The Reagan administration tasked the Grace Commission in 1982 with uncovering wasteful spending and practices, while the Clinton administration sought its own reinvention of government in 1993 with what was initially called the National Performance Review. Previous commissions have not produced overwhelming results in changing the stubborn bureaucracy, casting some doubt on what Kushner’s team can accomplish. Philip Joyce, a professor of public policy at the University of Maryland, said the domestic spending cuts in Trump’s budget blueprint suggest that this new committee would most likely focus more
