Well, today marks a big day,
a big win for Wall Street because the Federal Reserve has decided to water down
banking regulations that were actually meant to prevent another disaster, like the global financial crisis of 2008. All right. So the capital reserves
that a bank contains is really at the center of this regulation. And the Federal Reserve,
in response to some of these smaller banks failing recently, wanted to increase the amount of
federal reserves that banks have in order to prevent, you know, financial collapse. So, again, a bunch of banks
like Silicon Valley Bank and First Republic, they failed. Then the fed wanted to overhaul
something called, it's the Basel endgame. Okay. So under this new rule,
the world's largest banks, aka those with $250 million or more in assets,
would have to have their capital requirements boosted to 19% or by 19%. But they didn't want to do that. And they're honest about why they
didn't want to do that. Capital requirement, again, is a term
for how much money the banks are required to hold as a buffer against big losses, because, you know,
when you deposit your money at a bank, it doesn't just like sit there. Usually the bank invests that money. Okay. They gamble with your money. But the Federal Reserve wants to ensure
that these banks have enough capital as a buffer to prevent some of those, you know, prevent a complete
and utter disaster if some of those investments go south. So, the fed argued that the change
was intended to keep large banks from doing too much risky lending and trading. But the banks made a curious claim
to push back. They said this by raising the capital
the banks are required to hold as a cushion against losses. The plan could have also made loans more
expensive or harder to obtain, pushing more activity to non-bank providers
according to trade organizations. Wait wait wait, hold on, hold on. So the big banks are worried
that the capital requirement would make it harder for ordinary people
to get loans at their big bank, and thus they would need to go
to a smaller bank or a non-bank provider non-bank institution. How is that? How is that a bad thing? Isn't that a good thing? I mean, don't you want options
for people like. I think one of the issues with our
banking system is we have those banks that are too big to fail. That was a line that was commonly heard
after the 2008 economic collapse, because the idea was, well, if we just allow
these banks to fail, these big banks, that would crush the economy
because of all the people that are employed at these big banks,
all of the, the stake that these big banks have in our overall economy. And so, like, what? Like, why would the fed
find that argument convincing? Hey, don't scroll away.
Come back, come back. Because before the video continues,
we just want to urge you to lend your support to TYT. You power our honest reporting. You do it at t t.com/team
and we love you for it. Now unfortunately it appears
that they did find it convincing. We're going to get to what the fed
ended up doing in just a moment. But the big banks also spent
a lot of time lobbying. They lobbied pretty hard. Okay, so this May,
the Wall Street Journal reported that JP Morgan Chase CEO Jamie Dimon,
at a meeting in Washington last fall told his fellow CEOs to bypass Michael Barr, the central bank's vice chair for banking
supervision and the main architect of the original plan to increase
their capital requirements by 19%. So, as I mentioned,
big banks don't like it. So Dimon Jamie Dimon urged his fellow
bankers to instead press the fed or press other fed governors, in
particular Chair Jerome Powell, to alter the proposed capital rules so big U.S. Bank CEOs also met with Powell. Jerome Powell more than a dozen times
between last July and March, according to the Central Bankers
Public Calendar, bar met 15 times with the CEOs of the largest U.S. Banks during the same period. He also met with Diamond
in April and in May. A fed spokesperson said so bar,
in a statement said something that was, in my opinion, obvious and pretty clear, but for anyone who needs to hear it,
quote I have not felt bereft of attention from the banking lobby. Oh, I'm sure you didn't bar.
I'm sure you didn't. And so, look, they were in high gear. They're like, we're going to do
what we can to prevent this, or at least water down this regulation, because they want to invest
as much of their capital as possible, because that stands to benefit them
with potentially more profits. Like that's what they want to do. Having a capital buffer
at a higher percentage means that they have less capital to play with. Less capital to invest. And so they don't like that they want
to prevent that from happening. And in the end, it looks like the Federal
Reserve went along with what they wanted. So the banks weren't just going
after the fed. They also conducted a PR campaign
against the regulations. For instance, Goldman Sachs spent millions
on its own advocacy campaign. The Financial Services Forum,
which represents the eight largest U.S. Banks, also asked its members to chip in
$2 million apiece on another ad campaign. Do you guys understand? Like they're not spending money
because they're really concerned about the possibility of ordinary Americans
being able to obtain loans? Okay, they're spending a lot of money
on this PR campaign because they want to protect their profits. That's what. It's an investment that they're doing
on behalf of themselves. And in fairness, the opposition to the
new rules didn't just come from the banks. It also came from, you know, a certain caucus in Congress that is look, this is the Congressional Black Caucus
is full of all sorts of politicians that take major donations
from the banking industry and Wall Street. So I was unsurprised to find, according
to the Wall Street Journal, that members of the Congressional Black Caucus, housing advocates and civil rights groups
said the new requirements could inadvertently widen a long standing racial homeownership gap by making it more
expensive for banks to offer mortgages to lower income and minority borrowers. But look, I, I was in the market
for a home loan, and you want to know which banks had the absolute highest
interest rates associated with the loan? With the mortgage? The big banks. I did not get my loan from a big bank. So, like, I don't know
how that argument makes any sense. In fact, you could do this right now.
You could do this right now. Go ahead and look for well,
don't do it right now because you're watching the show. But after the show,
search for high yield savings accounts. Take a look at what JP Morgan Chase
or Chase Bank pays in interest for a high yield savings account. Then go to one of the smaller banks. Which bank is going to give you
a higher interest rate on your savings? It's not going to be Chase.
It's not going to be Wells Fargo. I know because obviously
I've researched this myself. And so it's just curious that this is
the argument that you're hearing from some of our lawmakers,
who I'm sure haven't taken a dime from the banking industry or Wall Street. And it's no surprise Anti-regulation
Republicans also spoke out against the fed and eventually the campaign worked. Although they weren't able to completely
scrap the increased capital requirement, they did water it down from 19% to 9%, and by the time the regulations are finalized, the 2024 election will already have
taken place, which is not good news if Donald Trump gets elected, because I
don't think Donald Trump would want the fed to move forward with this regulation. I could be wrong, but I do think
that Kamala Harris would be more likely to allow the fed to be independent
and implement this new increased capital requirement policy, but we'll see. We'll see what the final result will be,
because we still don't even know if the big banks will have an
increased capital requirement at all. Thanks for watching The Young Turks
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