Yelling at Michael Barr, the Federal Reserve’s top banking regulator, has never been particularly effective, according to his friends and co-workers. Nevertheless, America’s biggest banks, their lobbying groups, and even his own colleagues have responded to his proposal to tighten oversight of the nation’s large lenders with a mixture of incredulity and outrage.
Kevin Fromer, president of the Financial Services Forum, stated that there is no justification for significant increases in capital at the largest U.S. banks, in response to the proposed draft rules spearheaded by Mr. Barr. The proposal would require banks to have more easily accessible money on hand, potentially affecting their profits.
Rumors of the proposal triggered a lobbying blitz even before its release. Bank of America’s lobbyists, along with those associated with banks including BNP Paribas, HSBC, and TD Bank, flocked to Capitol Hill. Lawmakers sent concerned letters to the Fed and questioned its officials about the contents of the proposal.
On Wednesday, every Republican lawmaker on the House Financial Services Committee demanded that the formal proposal be withdrawn, while Senator Mark Warner expressed his fear that it could contribute to a “perfect storm” of stressors on the financial system.