ON THE CAMPAIGN trail, Donald Trump frequently pledged to “dismantle” the Dodd-Frank financial reforms passed in the wake of the 2008 financial crisis. On Wednesday, with the Federal Reserve’s release of a proposal to roll back capital and liquidity requirements, he caught his big whale.
Those requirements, imposed by the Dodd-Frank Act, were put in place to ensure that critical financial institutions could weather economic storms. The liquidity ratio was only finalized in September 2014. And yet, just four years later, on October 31, the Federal Reserve announced proposed changes that would reduce liquidity requirements by almost a third for banks such as Capital One and Charles Schwab with assets of $250 billion to $700 billion. Smaller banks would have even fewer restrictions.
In the lone dissent on the Fed’s four-member board, Lael Brainard said she could not support the proposal, which, among other things, would “weaken the buffers that are core to the resilience of our system.”