Sen. Elizabeth Warren (D-Mass.) last week expressed concerns about the frequency and nature of Federal Reserve Chairman Jerome Powell’s interactions with prominent bank executives and the influence those relationships could have on the Fed’s policy decisions.
In her July 2 letter, Warren sharply criticized the level of access Powell has given to bank executives, highlighting that since February 2018 she has met privately 19 times with JPMorgan Chase CEO Jamie Dimon, 10 times with BlackRock CEO Larry Fink, and seven times with Goldman Sachs CEO David Solomon.
Warren asked how the Fed ensures its policy decisions are fair and in the interest of the entire economy.
“The special access that bank executives have to you and other key decision makers at the Fed is another disturbing example of the culture of corruption that has taken root during your time leading the Fed,” Warren wrote.
In particular, Warren expressed concern that the informal one-on-one discussions could affect the implementation of higher capital requirements for banks, influence executive compensation structures and interfere with proposals for increased oversight of potential bank mergers.
She made Powell aware Letters sent About two weeks ago, he sent a letter to Powell saying Dimon was trying to target him as a “weak link” among bank regulators regarding Basel III.
In her June 17 letter, Warren cited the May report: The Wall Street Journal That suggests Powell may be leaning toward cutting capital requirements for large U.S. banks in half. He noted that Dimon, at a meeting in Washington last fall, “instructed the other chief executives to ignore Michael Barr, the central bank’s vice chairman for banking supervision, and instead to push other Federal Reserve governors, primarily the Fed chairman, to review capital requirements.”
In her June letter, Warren urged Chairman Powell to allow the Fed to convene a meeting by the end of the month to vote on a 16 percent capital increase.
Powell told House lawmakers in March that he expected “extensive and significant changes” to the capital requirements proposal the Fed released in July 2023.
but, “[t]”The Fed is currently floating a watered-down proposal,” Warren wrote on July 2.
In her letter last week, Warren pointed to the Fed’s refusal to join a multi-agency effort to cap executive pay for banks.
“The old framework puts our financial system at risk while lining the pockets of wealthy corporate bosses and investors,” she wrote.
Warren also cited the $3 billion JPMorgan Chase made from its acquisition of First Republic Bank last year, and the additional $1.5 million that Dimon made.
Warren asked what topics Powell discussed in each of his 19 meetings with Dimon, whether he discussed Basel III or made any promises to Dimon or other executives of major banks that would be subject to Basel III, and the extent to which Powell’s interactions with the executives influenced his decision to update the 1995 merger guidelines.
Warren cited recent data showing that political donations from banks have increased 54% since May 2007, and that JPMorgan has spent about $15 million on lobbying since 2019, and about $4 million in 2023 alone.
Powell said, The Senate Banking Committee on Wednesday In its semi-annual monetary policy report.
“We have received the letter and will respond,” the Fed said last week. Bloomberg.
