When Federal Reserve governors voted in June cut the enhanced supplementary leverage ratio – a measure of how much capital banks must hold relative to their assets – Sen. Elizabeth Warren’s near-immediate response was that such a move would not “free up a pot of money for banks to lend more or buy more assets.”
Rather, it would spur banks to push “increased dividends, buybacks and bonuses,” the Massachusetts Democrat said.
Warren and 10 fellow Democratic senators followed that up last month by asking regulators at the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. for “more rigorous data and analysis” to justify the proposal.
To further get her message across, Warren on Monday wrote the banks themselves – noting, for each of the nation’s six largest global systemically important financial institutions, the dividend increases and, if applicable, share repurchase programs each has planned after passing this year’s stress tests.
“Instead of responding to lower capital requirements with commitments to increase lending to, or lowering interest rates and fees for, businesses and households, JPMorgan is rewarding its wealthy shareholders and boosting executive compensation at the expense of financial stability and economic growth,” Warren and Sen. Bernie Sanders, I-VT, wrote Monday to CEO Jamie Dimon. “These actions directly contradict the rhetoric your lobbyists and trade associations are deploying in Washington to sell policymakers on Wall Street deregulation.”
Warren and Sanders point to a campaign the Bank Policy Institute launched in 2023, to counter a proposal by the Biden-era Fed to force the largest banks to carry up to 19% more capital.
“This would limit banks’ capacity to offer things like mortgages, car loans, credit cards and small-business loans,” the association wrote at the time.
Similarly, the Financial Services Forum asserted that “banks face unsubstantiated rising capital requirements that limit the financial opportunities for American families, raise costs for consumers, and slow economic growth.”
“Big bank lobbyists want policymakers to believe that lower capital requirements lead to more lending and better pricing for small businesses and households,” Warren and Sanders wrote Monday. “The behavior of big banks in 2025 suggests, much like a long body of historical empirical evidence, that this rhetoric is dangerously misleading.”
The senators tailored segments of the letter to specific banks – for example, noting the amount each received in Troubled Asset Relief Program money after the 2007-08 economic crisis, and citing by what percentage each bank’s stress capital buffer is due to decrease this year. The senators also cherry-picked any comments bank executives made during quarterly earnings conference calls.
“You even stated, ‘But at the end of the day … we just returned all the capital we earned back to the shareholders, and we’ll continue to do that,’” Warren and Sanders wrote to Bank of America CEO Brian Moynihan.
“Goldman Sachs’s CFO, Denis Coleman, even stated, ‘[w]e can also use return of capital through buybacks, etcetera, to reduce some of that buffer,” the senators wrote to Goldman CEO David Solomon.
“You even stated, ‘We were pleased with the results of our recent stress test. We are well positioned to continue to increase the return of capital to our shareholders through buybacks, which is a priority for us,’” the senators wrote to Citi CEO Jane Fraser.
Warren and Sanders asked each bank to calculate by how much they could increase lending capacity, purchasing capacity for U.S. Treasury securities, or reduce interest rates and fees on small-business and personal loans if shareholder returns were kept steady.
This line of questioning typically resurfaces when bank CEOs are asked to testify to the Senate Banking and House Financial Services committees, generally every year. This year’s hearings have not yet taken place.
Capital requirements are hardly the only issue about which Warren and Sanders have grilled bank CEOs in the past month. The senators wrote to the chief executives of 25 banks in late August, asking each to detail what plans the lenders had to implement a Consumer Financial Protection Bureau rule limiting overdraft fees – before Republican lawmakers and President Donald Trump overturned it.