Calling an effort to loosen regulations on the nation’s biggest banks “a threat to financial stability,” the Federal Reserve Bank of Minneapolis today sent a letter to the Board of Governors of the Federal Reserve System opposing its plan to relax liquidity-related regulations for large banks.
Commenting on the Board’s RIN 7100-AF20 proposal, the Minneapolis Fed letter states, in part: “This proposal to weaken regulations on banks is particularly alarming. … What is most alarming is that this is not a future generation forgetting mistakes of their parents or grandparents. It is the same generation that made the terrible mistakes in the first place that is already forgetting and now is following the same path again.”
The Minneapolis Fed has long warned about banks that are too big to fail and that might trigger public bailouts. In 2017, the Minneapolis Fed produced The Minneapolis Plan to End Too Big to Fail, which is a policy solution to enable the U.S. economy to flourish without exposing it to large risks of financial crises and without requiring taxpayer bailouts. That plan followed an earlier warning from the Minneapolis Fed in 2003.
Read the letter [pdf]
