Dear John,

It seems the big banks are always flirting with financial disaster.

They like to live dangerously because gambling with investors’ money is where their biggest payoffs can be found, and they assume that if the whole thing melts down like it did in 2008, the taxpayers will step in with big bailouts. The last time around, “Too big to fail” did not mean “Too big to tank the economy and leave consumers holding the bag.”

The key to a bank’s resiliency is its buffer of capital. If a bank is under-capitalized, it can lack the cash on hand to absorb losses and meet its obligations, resulting in bank failure. After the 2008 crisis, banks’ capital requirements were beefed up to help stabilize the industry and prevent further collapse.

Since then, with a lack of federal oversight under the Trump administration, capital requirements were loosened to dangerous levels, which led to the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023.

Now, Biden appointee Michael Barr on the Federal Reserve Board is proposing a much needed strengthening of capital requirements to prevent future bank collapses.

Sign the petition today and demand that the Federal Reserve Board of Directors institute the proposed increase in capital requirements for large banks.

The big banks, with their big political donations and connected lobbyists, are opposing the increased capital requirements, as these would limit their ability to engage in risky speculative endeavors that offer potential big wins for a few top executives.

But without increasing the financial cushions, the economy will be littered with weak spots, like aneurysms waiting to burst with little warning but devastating results.

The banks prefer not to have to build in these protections, as it limits the amount of money they have to play with in investment banking and trading, and it forces them to have to invest more time and energy in activities such as making loans to small businesses.

But it’s the right thing for the economy to prevent another wave of bank collapses, and to increase banks’ investments in building communities. The banks will not take on higher capital requirements unless the Fed requires it.

Urge the Federal Reserve Board to stand firm against the banking industry’s lobbying efforts and proceed with the new capital requirements.

Thank you for helping to strengthen the economy and prevent the taxpayers from, once again, “holding the bag.”

Robert Reich
Inequality Media Civic Action