|Petition to the Federal Reserve board of governors:
“Retire Scott Alvarez as general counsel of the Federal Reserve, filling his position with someone who will not publicly or privately undermine commonsense rules designed to prevent another Wall Street meltdown.”
Add your name:
The Federal Reserveâ€™s top lawyer â€“ an appointee of former Chairman Alan Greenspan â€“ has been undermining regulations behind the scenes since the Bush administration. But now, Scott Alvarez may have met his match: Senator Elizabeth Warren, and you.
In a recent Senate Banking Committee hearing, Senator Warren blasted General Counsel Scott Alvarez for criticizing Wall Street reform.1 Alvarez has so much influence, in an organization ruled by a board of seven governors, he is referred to as the â€œEighth Governor.â€2 In fact, while we were fighting to block the White House from making Larry Summers chair of the Federal Reserve, the New York Times suggested that as long as Alvarez was general counsel it might make little difference who got the top job.
Alvarez joined the Fed during the Reagan administration and became its chief counsel during the George W. Bush era. He is a diehard free-marketer appointed by former Fed Chair Alan Greenspan, with a long history of staunch opposition to any regulation of Wall Street. And as Senator Warren made clear, he doesn’t appear to have learned any of the lessons of the financial crisis, stubbornly sticking to an agenda of deregulation even after big bank fraud nearly brought down our economy. If we ever want to clean up Wall Streetâ€™s act, itâ€™s time for the Fed to bring in a new lawyer committed to reining in the big banks.
Alvarez first joined the Fed in the 80â€™s under his mentor, former Chairman Alan Greenspan. Throughout the 90â€™s, he helped Greenspan blow holes in existing regulations and lobby for more and more deregulation, like the repeal of the Glass-Steagall Act, all of which contributed to todayâ€™s skyrocketing inequality and the 2008 financial crash. It would be one thing if he had learned his lesson and reversed course, but he appears to be as wedded to a Wall-Street-first ideology as he was then â€“ only today, he has far more influence.3
Remember the Volcker Rule, which would ban big banks from making risky gambles for their own gain? Hundreds of thousands of CREDO members fought for a strong Volcker Rule before and after Wall Street reform was passed. But last November, Scott Alvarez publicly criticized the rule, and insiders widely blame the Federal Reserveâ€™s recent announcement that it would delay the Volcker Ruleâ€™s implementation for two years on Alvarez.4
During the Senate Banking Committee hearing, Senator Warren noted that last year Alvarez also publicly criticized the â€œswaps push-outâ€ provision of the Dodd-Frank law, before Congress eventually repealed it on the recommendation of Citigroup and JPMorgan Chase, and despite fierce resistance from thousands of CREDO members and other progressive allies. Heâ€™s also spoken out against a provision curtailing the ratings agencies that contributed to the crash, once pushed Congress to allow the Federal Reserve leeway to go easy on big insurance companies, and even had the gall to tell lawmakers to revisit Dodd-Frank.5
As Senator Warren said: â€œThe Fedâ€™s general counsel â€“ or anyone at the Fedâ€™s staff â€“ should not be picking and choosing which rules to enforce based on their personal views.â€6
Alvarez is more than publicly critical â€“ heâ€™s privately powerful. As general counsel, Alvarez oversees a massive team of lawyers that advise on every single aspect of the Federal Reserveâ€™s work. One top regulator who regularly deals with the Fed reportedly said, â€œHeâ€™s a major player in everything. You canâ€™t overstate his role. Everything has to go to him for approval and to be passed on.â€7
While Chairwoman Janet Yellen is committed to fighting inequality, and Governor Daniel Tarullo technically overseas regulation, it is Alvarez and his team who are deep in the weeds of every decision. To understand the impact one person can have, just look at the Office of the Comptroller of the Currency, another Wall Street regulator that was consistently friendly to big banks before replacing its general counsel in 2012.8
The general counsel reports to a group of seven governors on the Federal Reserve board, most of whom were appointed by President Obama. Allowing the general counsel to run roughshod over badly needed Wall Street reforms imperils the Federal Reserveâ€™s mission of maintaining stability in the U.S. banking system. Worse, Alvarezâ€™s outdated ideas put all of us at risk of more bank meltdowns, economic crashes, and too-big-to-fail bailouts. It is time for the Fed to appoint a new lawyer who will be committed to reining in Wall Street.
Tell the Fed board of governors: Retire Scott Alvarez. Click below to sign the petition:
Thank you for speaking out.
Becky Bond, Political Director
Add your name: