Current:Home > Contact-usFederal Reserve’s Powell: Regulatory proposal criticized by banks will be revised by end of year-DB Wealth Institute B2 Expert Reviews
Federal Reserve’s Powell: Regulatory proposal criticized by banks will be revised by end of year
View Date:2024-12-23 20:11:40
WASHINGTON (AP) — A sweeping bank regulatory proposal will be significantly revised by year’s end, Federal Reserve Chair Jerome Powell said Thursday, a potential victory for the large banks that have aggressively opposed the likely changes.
The proposed rule, issued last summer by the Fed and other regulatory agencies, is intended to implement changes that were negotiated internationally after the 2008 global financial crisis. Among other things, the rule would require the largest banks — those with more than $100 billion in assets — to hold more funds in reserve to protect against bad loans and other potential losses.
Large banks, though, have resisted the proposal, known as the “Basel III endgame” and spearheaded by the Fed’s vice chair for supervision, Michael Barr. The banks argue that the proposal would limit their ability to lend and would exceed what is necessary to match the global rules.
Banks aren’t the only opponents of the proposal. The NAACP and some other civil rights groups have expressed opposition out of concern that the proposal would make it harder for Black and Hispanic Americans to obtain mortgage loans.
Powell, under questioning by the Senate Banking Committee during his semi-annual testimony to Congress, acknowledged that the proposal could potentially reduce mortgage lending.
“There is a risk like that, and we’re very focused on it,” he said.
On Thursday, Powell also repeated a comment he made to the House Financial Services Committee Wednesday, that the Fed will make “broad and material” changes to the proposed rule. He put a time frame on those changes Thursday: Powell said he expects that the Fed will reach consensus on the revamped proposal by the end of the year.
Powell’s willingness to consider changes to the bank rule drew condemnation from some Democrats on the committee.
“You’ve gone weak-kneed on this,” said Sen. Elizabeth Warren of Massachusetts, a longtime Powell critic. “The American people need a leader at the Fed who has the courage to stand up to these banks and protect our financial system.”
Separately, Powell reiterated his comment from Wednesday that if inflation continued to fall back toward the Fed’s 2% target, which he expects, then the central bank would begin cutting its benchmark interest rate this year.
The Fed’s key rate, now at a 23-year high of about 5.4%, has led to much higher rates for mortgages, auto loans and credit card borrowing. Those higher borrowing costs have likely contributed to widespread public sourness about the economy, which poses a threat to President Joe Biden’s reelection bid.
“We’re waiting to become more confident that inflation is moving sustainably at 2%,” Powell said. “When we do get that confidence — and we’re not far from it — it’ll be appropriate” to implement rate cuts, “so that we don’t drive the economy into recession.”
veryGood! (17)
Related
- A growing and aging population is forcing Texas counties to seek state EMS funding
- Police in Greece allege that rap singer blew up and robbed cash machines to pay for music videos
- Ukrainian diplomats negotiate both climate change and Russia’s war on their nation at COP28 in Dubai
- Sylvester Stallone returns to Philadelphia for inaugural 'Rocky Day': 'Keep punching!'
- Ryan Reynolds Makes Dream Come True for 9-Year-Old Fan Battling Cancer
- Leading candy manufacturer Mars Inc. accused of using child labor in CBS investigation
- Florence Pugh hit by flying object while promoting 'Dune: Part Two' in Brazil
- Muppets from Sesame Workshop help explain opioid addiction to young children
- John Krasinski Reveals Wife Emily Blunt's Hilarious Response to His Sexiest Man Alive Title
- 'Colin From Accounts' deserves a raise
Ranking
- Brian Kelly asks question we're all wondering after Alabama whips LSU, but how to answer?
- China says a US Navy ship ‘illegally intruded’ into waters in the South China Sea
- 50 Fascinating Facts About Jay-Z: From Marcy to Madison Square
- 'I did not write it to titillate a reader': Authors of books banned in Iowa speak out
- 'This dude is cool': 'Cross' star Aldis Hodge brings realism to literary detective
- Israel expands Gaza ground offensive, says efforts in south will carry no less strength than in north
- In some Czech villages, St Nicholas leads a parade with the devil and grim reaper in tow
- Right Here, Right Now Relive Vanessa Hudgens and Cole Tucker’s Love Story
Recommendation
-
Republican David Schweikert wins reelection in affluent Arizona congressional district
-
Leading candy manufacturer Mars Inc. accused of using child labor in CBS investigation
-
Consider a charitable gift annuity this holiday. It's a gift that also pays you income.
-
French investigation into fatal attack near Eiffel Tower looks into mental illness of suspect
-
Wisconsin authorities believe kayaker staged his disappearance and fled to Europe
-
Virginia woman won $1 million after picking up prescription from CVS
-
North Dakota Gov. Doug Burgum ends 2024 Republican presidential bid days before the fourth debate
-
Police in Greece allege that rap singer blew up and robbed cash machines to pay for music videos