The top Democrat on the House Financial Services Committee was in a lonely spot on Wednesday. Rep. Maxine Waters (D-Calif.) was the sole lawmaker present during a subcommittee hearing who unambiguously defended the Biden administration’s approach to capital reform.
Waters said she was “a bit irritated” by the contents of the hearing, where she was one of the last lawmakers to ask questions.
Left unsaid: Whether she was more frustrated with Republicans or Democrats.
We’ve written elsewhere about Democrats’ mixed feelings about the Basel III Endgame proposal from Federal Reserve Vice Chair for Supervision Michael Barr. The plan would overhaul the calculation of banks’ capital requirements and increase them for the largest institutions. Banks are opposed, and there are billions of dollars on the line.
In an interview, Waters told us she believes her Democratic colleagues are “sincere” in their worries about capital reform. Those concerns range from the impact capital reform might have on small business lending, mortgage lending and clean energy tax credits.
But it’s also clear the two banking crises of the last 15 years still weigh on the California Democrat. “Have you forgotten so soon?” Waters said. “What happened with Silicon Valley Bank, Signature [Bank] and First Republican — that just happened last year.”
Waters said she would be meeting with Democratic members on the House Financial Services Committee in the weeks ahead to “take each of their arguments, challenge them and pull people back.”
“I’m going to be able to pull some back,” Waters added.
Some news here: Waters also said she’s got a letter in the works that will urge the Fed to “promptly finalize these rules and reject industry-led attacks to materially weaken if not block the implementation of these safeguards,” according to a draft we obtained. The California Democrat is actively hunting for signatories on that letter now.
“I’m trying to make people understand the big banks are very powerful. They’re very powerful, and they are weighing on this big time,” Waters said. “They’re telling people, don’t sign on to Maxine Waters’ letter.”
Waters will also tell colleagues that banks’ warnings are overblown, including how capital reform might undercut their ability to do business in areas like small business lending.
— Brendan Pedersen
