American Banking Giants Consider Suing the Federal Reserve
A group of major US banks, including JPMorgan Chase, Citibank, and Goldman Sachs, are contemplating the unprecedented move of filing a lawsuit against the US Federal Reserve. The banks have enlisted the services of Eugene Scalia, a prominent conservative trial lawyer and son of former Supreme Court justice Antonin Scalia, to draft the legal action. The lawsuit aims to challenge proposed rules that would require banks to increase their cash reserves by 20%. The banks argue that these rules are excessively stringent and would effectively force them to hold 30% in cash. They believe that the Federal Reserve needs to provide a more detailed justification for these requirements.
Banks Concerned About Bond Losses
US banks are currently grappling with significant losses on bonds. While banks can hold onto these bonds until they mature, they become a liability when liquidity injections are needed. A recent report from the Federal Deposit Insurance Corporation (FDIC) reveals that the total value of unrealized securities in the banking system stands at $684 billion.
Hot Take: Legal Battle Brewing Between Banks and Fed
A potential legal showdown is brewing between major US banks and the Federal Reserve over proposed rules that would require increased cash reserves. JPMorgan Chase, Citibank, and Goldman Sachs have hired prominent conservative lawyer Eugene Scalia to draft a lawsuit challenging these regulations. The banks argue that the rules are too strict and would force them to hold an excessive amount of cash. Meanwhile, US banks continue to face losses on bonds, which can become a liability when liquidity is needed. This legal battle has significant implications for both the banking sector and the Federal Reserve’s regulatory authority.
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