Sen. Elizabeth Warren, D-Mass., has accused Federal Reserve Chair Jerome Powell of not doing his job as he considers changes to the Basel III Endgame regulations, CNBC first reported.
In a June 17 letter to Powell, Warren wrote that the chair would be acting on JPMorgan Chase CEO Jamie Dimon's request in "advocating for slashing in half the Basel III bank capital requirements that global regulators determined are necessary to prevent another financial crisis."
Basel III was created over a decade ago and is a set of voluntary international financial standards agreed upon by the Bank for International Settlements (BIS). Basel III was implemented following the financial crisis of 2008.
"I am disappointed by press reports indicating that you are personally intervening — after numerous meetings with big bank CEOs — to delay and water down the Basel III capital rules," said Warren.
"These rules are critical and long overdue, particularly in the wake of the Silicon Valley and Signature Bank failures, and as risks from the weak commercial real estate market and other economic threats ripple through the banking system," Warren continued.
Last year, three U.S. banking regulators including the Federal Reserve proposed rules which, if enacted, are estimated to result in a 16% increase to common equity tier 1 capital requirements and a 20% increase to risk-weighted assets (RWA) for large bank holding companies, among other regulatory changes.
"It now appears that you are directly doing the bank industry's bidding, rewarding them for their extensive personal lobbying of you," Warren continued in her letter. "Taking orders from the industry that caused the 2008 economic meltdown would sacrifice the financial security of middle-class and working families to line the pockets of wealthy investors and CEOs."
Bank CEO's and their lobbying groups have said the changes are unnecessary and would force the financial industry curtail lending.
"Instead of doing Mr. Dimon's bidding, you should do your job and allow the Board to convene for a vote on a 16% capital increase by June 30th, as global regulators determined was necessary to prevent another financial crisis," Warren's letter concluded.