Federal regulators are at odds over how to advance a sweeping plan to require the nation’s biggest banks to strengthen their financial resilience — and they’re running up against a presidential election that could jeopardize the entire project.
Officials at the Federal Reserve and other regulators, which jointly unveiled the proposal in July 2023, have been negotiating for months over how to move forward with the draft rules in the face of a furious lobbying effort by Wall Street.
But they have been unable to reach a consensus on what their next steps should be, according to people familiar with the discussions, further complicating efforts to agree on revisions to the proposal, which would sharply increase banks’ capital requirements.
“The banks have won,” said Dennis Kelleher, who leads Better Markets, an advocacy group pushing for a strict rule. “They have delay, stalemate. … It doesn’t get better than that if you’re Wall Street.”
In a world of good-faith, rational actors, it is reasonable to consult experts in the industry you’re about to regulate. In theory, a good-faith adversarial discussion will root out inconsistencies and logical fallacies within the regulation.
Obviously that’s usually not the case in modern politics, but I think the system was designed when it was thought that the average person would be operating in good faith, and in that context it makes sense.