Banks Aren’t Chasing Regulatory Shortcuts — They’re Speaking Out Against Them

Dear New York Times:

The article "Banks Are Racking Up Wins Even Before Trump Is Back in White House" mischaracterizes the state of bank regulation. Banks are not seeking to roll back rules and make risky bets. They hold over 3.5x more capital than they did during the Global Financial Crisis, and the COVID-19 pandemic and numerous other post-crisis events have demonstrated bank resilience. Yet regulators have continued to propose further capital increases and sought to dictate through the examination process how banks are run.

It is surprising to see banks criticized for seeking transparency in their regulation, in no small part because it is required by law and afforded to all other industries. A driver who wants to know the speed limit isn't "cheating the system"; an auto company that builds its cars to pass government-required crash tests isn't making "risky bets" with rider safety. And the general presumption of our laws is that rules get better with public comment, not worse.

Banks are hardly alone in seeking an end to the one-way regulatory ratchet of the past decade. The Basel Endgame proposal garnered opposition from 97% of commenters including small businesses, consumer groups and community groups who rely on bank credit. Among members of Congress, opposition was bipartisan and near universal.

If regulatory reform is at hand, that is good news for America's consumers and businesses, and more broadly for U.S. economic growth.