Op-Ed: An Unnecessary Burden, The Federal Reserve’s Proposal To Increase Capital Requirements On Banks 

June 21, 2024

By Dr. Jovanna Marc, Founder, Multi Assistance Resource Center

As the Founder of the Multi Assistance Resource Center (MARC), I have dedicated my career to strengthening families, growing a sustainable regional economy, cultivating leadership and philanthropy, and fostering respect for all citizens.

I have seen firsthand the crucial role that accessible financial services play in our communities. Therefore, I am compelled to voice my strong opposition to the Federal Reserve’s recent proposal to raise capital requirements for banks.

“For many families, loans are a lifeline …”

Increased capital requirements would force banks to hold more capital, reducing their ability to lend. This will result in stricter lending requirements and more expensive borrowing as banks seek to cover the costs associated with holding additional capital. For many families, loans are a lifeline, enabling them to buy homes, start small businesses, or pay for college tuition. If access to affordable loans becomes more restricted, these essential goals will become unattainable for many, stifling personal and community growth.

The Biden Administration has made it clear that leveling the economic playing field is a top priority. Equitable access to financial services is a cornerstone of this vision, and the proposed capital requirements stand in stark contradiction to this goal. Restricting access to credit would disproportionately affect lower-income families and small businesses, the very groups that need support the most. It is essential to recognize that economic equity cannot be achieved if financial institutions are hamstrung by excessive regulatory burdens.

At MARC, we understand the transformative impact that equitable financial services can have on a community. We have seen families lift themselves out of poverty, entrepreneurs turn ideas into thriving businesses, and students achieve their educational dreams—all made possible through accessible and affordable financial services. By imposing higher capital requirements, we risk undermining these achievements and stalling the progress we have worked so hard to foster.

Furthermore, the argument for increasing capital requirements lacks substantiation in the current economic context. Our banking system has demonstrated remarkable resilience and adaptability under the existing regulatory regime. Additional capital requirements would impose unnecessary costs without delivering corresponding benefits in terms of stability or risk mitigation. Instead of fostering economic growth, these requirements would create barriers, making it harder for families and small businesses to access the credit they need to thrive.

I urge policymakers to reconsider this proposal and recognize the broader implications it holds for our communities. Raising capital requirements for banks is a solution in search of a problem, one that will do more harm than good. I call on Leader Schumer and Leader Jeffries to oppose this rule, and urge the Federal Reserve to focus on policies that promote economic equity and growth, ensuring that financial services remain accessible and affordable for all.

“… build a future where every family and business has the opportunity to succeed …”

In standing up for those who need it most, we must advocate against this new rule. Let us work together to build a future where every family and business has the opportunity to succeed, supported by a banking system that is both strong and accessible. Our communities depend on it.

Multi Assistance Resource Center (MARC)

Dr. Jovanna Marc is the Founder of the Multi Assistance Resource Center (MARC), a peer-run organization that facilitates the delivery of social and public health services to qualified individuals provided by nonprofit organizations and government agencies. https://marcresources.org/

Photo credit: The Dunbar National Bank was the first bank in Harlem to be managed and staffed by African-Americans.

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