Credit Suisse Troubles Underscore Need for Continued Focus on Regulating Big Banks

WASHINGTON, D.C. — The poor financial health of Credit Suisse has sent shares plummeting in recent days and spurred its executives to reassure employees and investors that it has a strong enough capital buffer to withstand market turmoil. That statement came weeks after Michael Barr, the Federal Reserve’s new vice chairman for supervision, indicated that the central bank would review deregulatory steps enacted under the Trump administration that weakened the financial cushion required for the world’s biggest banks. Lisa Gilbert, executive vice president of Public Citizen, issued the following statement:

“The tumult at Credit Suisse was brought on by the bank’s own penchant for recklessness and risk-taking, which caused market participants to lose confidence in its ability to withstand changing conditions, such as this year’s rise in interest rates and significant commodity volatility – highlighting that financial regulation remains extremely relevant and important. Regulators must remain vigilant – given the risks giant financial firms pose to the global financial system – and work to complete the long overdue rule from the Dodd-Frank Wall Street Reform Act that would deal with risky CEO behavior incentivized by huge pay packages.

“Under the Trump administration, regulators weakened big bank leverage, trading, and capital requirements. Woes at Credit Suisse indicate the folly of doing so, and the Federal Reserve should reverse Trump-era deregulatory giveaways that put banking industry profits over the health of the financial system. U.S. officials must also make clear in public statements that they will unequivocally rule out any financial bailout of Credit Suisse should the company’s position further deteriorate.”