JPMorgan Chase, Citibank and Goldman Sachs Drafting Landmark Lawsuit Against Federal Reserve: Report
A group of America’s biggest banking titans are considering whether they should pull a shocking move – suing the U.S. Federal Reserve.
JPMorgan Chase, Citibank and Goldman Sachs are on the list of major banks who have hired one of the best conservative trial lawyers to draft the lawsuit, reports Semafor.
Eugene Scalia, son of the former Supreme Court justice Antonin Scalia, is spearheading the legal effort, which would aim to eliminate proposed rules that would force banks to increase the amount of cash they have on hand.
The Fed wants banks to hold an additional 20% in cash on their balance sheets. The move is designed to ensure they have enough capital to withstand concerns about liquidity and avert the types of bank runs that ripped through the banking sector one year ago.
But the banks say the rules are far too strict, citing an internal analysis that shows they would actually be forced to keep 30% in cash on hand.
Scalia says the Fed has plenty of explaining to do.
“As a matter of legal process, it’s not going to be enough to say that a bunch of regulators got together in Switzerland, and this rule is what they brought down from the mountain.
The agencies have to do their own work, explaining why these new requirements are properly calibrated, and why their benefits are worth the costs. This proposal doesn’t do that.”
Banks across the US continue to face significant losses on bonds.
And although banks can simply hold bonds until they mature, they can become an extreme liability when banks need an injection of liquidity.
A recent report from the Federal Deposit Insurance Corporation (FDIC) found the total number of unrealized securities in the banking system is now pegged at $684 billion.
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Author: Daily Hodl Staff
