Dear friend,
Every American who has, wants, or needs a financial product or service of any type—a credit or debit card, savings or checking account, loan of any type—depends on federal financial regulatory agencies to protect their interests as consumers, savers, investors, borrowers, or retirees. Those regulators are also supposed to protect the economy, financial system, and taxpayers from horrifically costly financial crashes and taxpayer funded bailouts (as happened in 2008 and 2023).
Unfortunately, that is the opposite of what is happening now: every single week the financial regulators are taking dangerous actions that would have been unthinkable just two years ago. They are consistently prioritizing the interests and profits of Wall Street’s biggest financial conglomerates and the broader financial industry above all else, making the affordability crisis worse, enabling socially useless wealth extraction activities, unleashing financial predators and criminals to prey on unprotected consumers, savers, investors, borrowers, and retirees, and, worst of all, making another catastrophic financial crash much more likely. Adding insult to injury, these regulators (now more accurately called deregulators) are shamefully packaging and pitching their pro-Wall Street actions as in the best interests of hardworking Main Street Americans. That’s just not true.
For example, one banking agency is proposing to let bankers supervise themselves; another is proposing to strip its own supervisors of their best tool to stop the Jeffrey Epsteins of the world and money launderers; and all three banking agencies are making community banks targets for private equity predators. Another example is the CFPB, which is making it difficult to impossible for ripped off consumers to file complaints against banks, and opening the door to discrimination by gutting fair lending protections, which will fall hardest on Americans who can least afford it. And the SEC just posted its worst enforcement record in modern history: fewer cases, smaller penalties, less accountability, basically giving scammers and fraudsters a green light to increase their predatory activities.
When those who are supposed to protect us and prevent disasters fail to do their jobs, Main Street Americans are the ones left at risk and will pay the price.
And nowhere are the stakes higher than in the fight over bank capital. I know "bank capital" sounds like a technical term, but it’s really just a fancy word for money. It’s super important, however, because capital is all that stands between a failing bank and a taxpayer bailout. When the biggest banks had too little of it in 2008 and the regional banks had too little in 2023, they couldn’t cover the losses from their own reckless behavior. The result was bailouts, which are really nothing more than taxpayers providing banks with the capital they should have had before they failed.
Yet the banking regulators are nonetheless dangerously slashing capital requirements at the biggest, most dangerous banks basically to the inadequate levels they had before 2008. And here's the dirty secret Wall Street never mentions when it lobbies for lower capital: the lower a bank's equity capital, the higher its revenues, profits, and bonuses. In truth, capital cuts are a compensation strategy dressed up as economic policy. But as capital goes down, the danger to the rest of us goes way up.
So that these facts were better understood, we hosted a webinar entitled "The Economy, the New Fed Chair, Capital, and You" that laid out exactly what is happening, why it matters, and who pays when it goes wrong. We also exposed a particularly galling consequence of the current capital proposals: they harm community banks which lend about 75 cents of every deposit dollar back into their communities, while the biggest banks only lend about 40 cents. These rules don't level the playing field, help the economy, or increase lending; they tilt it further toward Wall Street profits and bonuses, and away from the interests of Main Street Americans and their communities.
Which brings us to why the next few weeks are so critical. Jay Powell's term as Fed Chair ends on May 15, 2026 and Kevin Warsh—Trump's nominee to succeed him—will be voted on soon in the Senate. We've documented Warsh's record, his reversals, and the key questions he should be asked before getting the job. That’s important because the Fed Chair doesn't just vote on interest rates; he also has enormous influence on the entire (de)regulatory agenda, including whether the biggest banks are properly supervised and regulated. That means whether they are required to have enough capital to absorb their own losses, or whether Main Street is forced to pay for those losses instead. To understand the stakes, I urge you to watch the webinar.
Here's the thing about a month like April: the volume and velocity of these actions is not accidental. It is a strategy—propose lots of things at once, hide behind false claims of Main Street benefits, move fast, and hope no one notices or is keeping score. We notice and are keeping score. That's what Better Markets exists to do. And as long as you're with us, we will keep doing it.
Read on to see the details of what happened this month.
With you in the fight,
Dennis
