Connect with us

Business

New ‘endgame’ bank rules promise greater financial stability, lower returns on December 29, 2023 at 11:00 am Business News | The Hill

Published

on

The banking sector is bracing for a major set of regulations prompted by the 2007-2008 financial crisis, but whose origins extend as far back as the termination of the gold standard and the introduction of freely floating international currencies.

Bank regulators around the world are poised to finalize the third Basel Accord, an international set of bank capital rules born from a summit that began in 1974.

Experts say the new regulations, known as the “Basel III Endgame,” are still necessary and will help to stabilize an international financial system that is prone to periodic collapse.

Meanwhile, banking industry groups and lobbies are firing on all cylinders to water down the proposed rule changes ahead of a January 16 deadline for public comment.

Advertisement

The new international rules compel banks to hold more capital and rely less on their own internal modeling. While the risk of traditional bank runs like the ones that brought down Silicon Valley Bank (SVB) and Signature Bank earlier this year likely won’t be substantially mitigated by Basel III Endgame, experts say it could reduce the risk of a deeper, industry-wide failure like in 2008.

“There’s a vast body of academic research that presents … a very broad consensus to say that from the current level an increase in capital requirements is probably a good idea – that’s viewed from the perspective of the system as a whole, not from that of an individual bank,” Nicolas Véron, a senior fellow with the Peterson Institute for International Economics, told The Hill.

What will Basel III mean for banks?

The central feature of the new banking rules is higher requirements for capital, which is a measure of the resources banks have to withstand losses. The Federal Deposit Insurance Corporation (FDIC) estimates an aggregate 16-percent increase in common equity requirements for affected banks.

The rules would also broaden out these requirements for banks worth $100 billion or more, pulling the threshold for more capital down from the $250 billion mark to apply to banks of the size of SVB and Signature.

Advertisement

Banks and their advocates tend to oppose increasing capital requirements, arguing that the Dodd-Frank reforms following the 2007-08 crisis were sufficient and stricter rules will mean fewer loans into the economy.

Higher capital requirements also limit banks’ ability to leverage their capital and extend their balance sheets with borrowed money to distribute more profits to shareholders.

But the Bank of International Settlements (BIS), the international coordinating body for central banks like the Federal Reserve, says that too much leverage was a driving force behind the 2007-2008 financial crisis.

“An underlying cause of the global financial crisis was the build-up of excessive on- and off-balance sheet leverage in the banking system,” a BIS write-up of the Basel plan reads.

Advertisement

“At the height of the crisis, financial markets forced the banking sector to reduce its leverage in a manner that amplified downward pressures on asset prices. This deleveraging process exacerbated the feedback loop between losses, falling bank capital and contracting credit availability.”

More transparency on leverage ratios

Having banks use a more standardized risk model is another key feature of the new rules. The last round of Basel regulations allowed banks to do their own risk assessments.

“This was a very easy system to game,” financial writer and researcher Nathan Tankus told The Hill in an interview. 

“You would have a risk modeler who would come in from the compliance department, model the activities that a trading desk was doing, let them do that for a few weeks. Then you would kick the compliance person out, make sure they weren’t allowed at your desk anymore, and then you’d play around with the model and figure out what risk you can take to earn more money without the risk model realizing it,” he said.

Advertisement

The BIS has also called out this operational duplicity and suggested it needs to be amended.

“In many cases, banks built up excessive leverage while reporting strong risk-based capital ratios,” the BIS wrote in 2017.

The proposed rule changes include replacing banking organizations’ internal models for credit risk and operational risk with standardized approaches, the Federal Reserve says.

Disputed effects of higher capital requirements

Bankers say that having to keep more capital on their books means they will decrease lending to households and small businesses or increase the interest rates on their loans, making them more expensive.

Advertisement

“When capital requirements are set excessively high, it makes it much harder to secure a loan or credit — this is especially true for working families and small businesses,” the Bank Policy Institute, a trade group for the banking industry, says on its website.

“If we go too far in terms of burdening US banks with regulations, it is absolutely going to negatively impact a specific subset of people that rely on those institutions, not only for business loans but personal loans, agricultural loans, that type of thing,” financial services director Dana Twomey of consultancy West Monroe told The Hill.

But some research says otherwise.

One frequently cited paper from 2009 found “that there would likely be relatively small changes in loan volumes by U.S. banks as a result of higher capital requirements on loans retained on the banks’ balance sheets.”

Advertisement

Even if banks restructure their balance sheets to optimize returns on stock, such moves “appear unlikely to be large enough, even in the aggregate, to significantly discourage customers from borrowing or move them to other credit suppliers in a major way,” the researcher found.

Another BIS paper found that “loss-absorbing capital is only a small proportion of banks’ balance sheets. Increasing this proportion to 10 to 15 percent does not materially affect a bank’s average cost of funding.” 

Even assuming diminished lending as a result of higher capital requirements, the Fed could very well offset this stinginess with lower inter-bank interest rates, which could have a more broadly stimulative effect on the economy even despite tighter private lending standards.

“A bug here can also be seen as a feature,” Tankus told The Hill.

Advertisement

What are lawmakers saying?

Some Democrats have been trumpeting the new rules, arguing they’re needed to stabilize the economy against the next inevitable crisis.

“The Fed’s rules for stronger capital requirements for big banks are crucial to protect the economy and taxpayers when banks take risky bets and lose money,” Sen. Elizabeth Warren (D-Mass.) said in a statement to The Hill. 

“Wall Street executives are fighting tooth and nail against these rules because they threaten their multimillion-dollar bonuses — but regulators must reject the Big Bank lobby’s efforts and finalize strong capital requirements swiftly,” she said.

Key Republicans on the Senate Banking Committee and House Financial Services Committee have largely backed the banking industry.

Advertisement

“This proposal could limit, and frankly I think will limit, the following: availability of credit for housing for those who need it most, severely restrict lending for small businesses,” Sen. Tim  Scott (R-S.C.) said during a hearing on Wall Street oversight earlier this month.

In a letter to financial regulators sent in September, House Republicans bemoaned the increased capital requirements and said the whole plan should be scrapped.

“The proposal .. would force the U.S. to overcapitalize financial institutions, compromising our global competitiveness,” they said.

Just how stable is the financial sector now?

The financial sector teetered in March after SVB and Signature tanked due to clumsy management and basic interest rate exposure — something regulators could have caught but didn’t. 

Advertisement

This resulted in the Fed’s extending a line of credit backed by taxpayer money to the banking industry, as well as a private-sector bailout from other big banks to rescue First Republic, another lender that was about to go under.

“The failure of two regional banks in Spring 2023 underscored that activities of non-global systemically important banks can pose a risk to financial stability,” the Treasury Department’s Financial Stability Oversight Council (FSOC) said in its annual report, released last week.

Despite fears of wider failures on the scale of 2007, governmental and private-sector bailouts were able to prop up the industry up, further buttressed by the roaring post-pandemic recovery, leading FSOC to deem the U.S. banking system in December “resilient overall.”

But some substantial risks for FSOC remain, notably in securities related to residential real estate and the $6-trillion commercial real estate sector. They’re risks that raise the specter of the predatory securitized mortgages that tanked big banks starting in 2007 and led to a legislative rescue of the industry.

Advertisement

Maturing loans and expiring leases amid weak demand for office space have the potential to strain the sector further, Treasury officials told The Hill, encouraging market participants to keep a close eye on the sector.

Failures there could spread beyond that segment of the market, they said.

Despite the warnings, the financial sector doesn’t want any more interference in how they securitize mortgages or other types of loans.

“Capital requirements play a key role in the ability of banks to participate in securitizations to fund lending. Higher capital requirements would force banks to hold less inventory leading to lower [asset-backed security] liquidity and higher spreads which in turn raises costs for consumers and businesses,” financial trade group SIFMA said in a November statement.

Advertisement

Market commentators say that changing the way securitization markets work and reining them in is precisely the point of the new regulations.

“Whatever you think about the [impact of these rules on securitization] and how true that is, there’s a certain point of view that says ‘Well, good. That’s a feature, not a bug. Securitization has all sorts of potential pathologies … and so much the better for our financial markets,” Tankus told The Hill.

​Business, banking regulator, banking system, basel III, basel III endgame, Elizabeth Warren, Tim Scott The banking sector is bracing for a major set of regulations prompted by the 2007-2008 financial crisis, but whose origins extend as far back as the termination of the gold standard and the introduction of freely floating international currencies. Bank regulators around the world are poised to finalize the third Basel Accord, an international set…  

Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

How Epstein’s Cash Shaped Artists, Agencies, and Algorithms

Published

on

Jeffrey Epstein’s money did more than buy private jets and legal leverage. It flowed into the same ecosystem that decides which artists get pushed to the front, which research gets labeled “cutting edge,” and which stories about race and power are treated as respectable debate instead of hate speech. That doesn’t mean he sat in a control room programming playlists. It means his worldview seeped into institutions that already shape what we hear, see, and believe.

The Gatekeepers and Their Stains

The fallout around Casey Wasserman is a vivid example of how this works. Wasserman built a powerhouse talent and marketing agency that controls a major slice of sports, entertainment, and the global touring business. When the Epstein files revealed friendly, flirtatious exchanges between Wasserman and Ghislaine Maxwell, and documented his ties to Epstein’s circle, artists and staff began to question whose money and relationships were quietly underwriting their careers.

That doesn’t prove Epstein “created” any particular star. But it shows that a man deeply entangled with Epstein was sitting at a choke point: deciding which artists get representation, which tours get resources, which festivals and campaigns happen. In an industry built on access and favor, proximity to someone like Epstein is not just gossip; it signals which values are tolerated at the top.

When a gatekeeper with that history sits between artists and the public, “the industry” stops being an abstract machine and starts looking like a web of human choices — choices that, for years, were made in rooms where Epstein’s name wasn’t considered a disqualifier.

Funding Brains, Not Just Brands

Epstein’s interest in culture didn’t end with celebrity selfies. He was obsessed with the science of brains, intelligence, and behavior — and that’s where his money begins to overlap with how audiences are modeled and, eventually, how algorithms are trained.

He cultivated relationships with scientists at elite universities and funded research into genomics, cognition, and brain development. In one high‑profile case, a UCLA professor specializing in music and the brain corresponded with Epstein for years and accepted funding for an institute focused on how music affects neural circuits. On its face, that looks like straightforward philanthropy. Put it next to his email trail and a different pattern appears.

Advertisement

Epstein’s correspondence shows him pushing eugenics and “race science” again and again — arguing that genetic differences explain test score gaps between Black and white people, promoting the idea of editing human beings under the euphemism of “genetic altruism,” and surrounding himself with thinkers who entertained those frames. One researcher in his orbit described Black children as biologically better suited to running and hunting than to abstract thinking.

So you have a financier who is:

  • Funding brain and behavior research.
  • Deeply invested in ranking human groups by intelligence.
  • Embedded in networks that shape both scientific agendas and cultural production.

None of that proves a specific piece of music research turned into a specific Spotify recommendation. But it does show how his ideology was given time, money, and legitimacy in the very spaces that define what counts as serious knowledge about human minds.

How Ideas Leak Into Algorithms

There is another layer that is easier to see: what enters the knowledge base that machines learn from.

Fringe researchers recently misused a large U.S. study of children’s genetics and brain development to publish papers claiming racial hierarchies in IQ and tying Black people’s economic outcomes to supposed genetic deficits. Those papers then showed up as sources in answers from large AI systems when users asked about race and intelligence. Even after mainstream scientists criticized the work, it had already entered both the academic record and the training data of systems that help generate and rank content.

Epstein did not write those specific papers, but he funded the kind of people and projects that keep race‑IQ discourse alive inside elite spaces. Once that thinking is in the mix, recommendation engines and search systems don’t have to be explicitly racist to reproduce it. They simply mirror what’s in their training data and what has been treated as “serious” research.

Advertisement

Zoomed out, the pipeline looks less like a neat conspiracy and more like an ecosystem:

  • Wealthy men fund “edgy” work on genes, brains, and behavior.
  • Some of that work revives old racist ideas with new data and jargon.
  • Those studies get scraped, indexed, and sometimes amplified by AI systems.
  • The same platforms host and boost music, video, and news — making decisions shaped by engagement patterns built on biased narratives.

The algorithm deciding what you see next is standing downstream from all of this.

The Celebrity as Smoke Screen

Epstein’s contact lists are full of directors, actors, musicians, authors, and public intellectuals. Many now insist they had no idea what he was doing. Some probably didn’t; others clearly chose not to ask. From Epstein’s perspective, the value of those relationships is obvious.

Being seen in orbit around beloved artists and cultural figures created a reputational firewall. If the public repeatedly saw him photographed with geniuses, Oscar winners, and hit‑makers, their brains filed him under “eccentric patron” rather than “dangerous predator.”

That softens the landing for his ideas, too. Race science sounds less toxic when it’s discussed over dinner at a university‑backed salon or exchanged in emails with a famous thinker.

The more oxygen is spent on the celebrity angle — who flew on which plane, who sat at which dinner — the less attention is left for what may matter more in the long run: the way his money and ideology were welcomed by institutions that shape culture and knowledge.

Advertisement
Ghislaine Maxwell seen alongside Jeffrey Epstein in newly-released Epstein files from the DOJ. (DOJ)

What to Love, Who to Fear

The point is not to claim that Jeffrey Epstein was secretly programming your TikTok feed or hand‑picking your favorite rapper. The deeper question is what happens when a man with his worldview is allowed to invest in the people and institutions that decide:

  • Which artists are “marketable.”
  • Which scientific questions are “important.”
  • Which studies are “serious” enough to train our machines on.
  • Which faces and stories are framed as aspirational — and which as dangerous.

If your media diet feels saturated with certain kinds of Black representation — hyper‑visible in music and sports, under‑represented in positions of uncontested authority — while “objective” science quietly debates Black intelligence, that’s not random drift. It’s the outcome of centuries of narrative work that men like Epstein bought into and helped sustain.

No one can draw a straight, provable line from his bank account to a specific song or recommendation. But the lines he did draw — to elite agencies, to brain and music research, to race‑obsessed science networks — are enough to show this: his money was not only paying for crimes in private. It was also buying him a seat at the tables where culture and knowledge are made, where the stories about who to love and who to fear get quietly agreed upon.

Bill Clinton and English musician Mick Jagger in newly-released Epstein files from the DOJ. (DOJ)

A Challenge to Filmmakers and Creatives

For anyone making culture inside this system, that’s the uncomfortable part: this isn’t just a story about “them.” It’s also a story about you.

Filmmakers, showrunners, musicians, actors, and writers all sit at points where money, narrative, and visibility intersect. You rarely control where the capital ultimately comes from, but you do control what you validate, what you reproduce, and what you challenge.

Questions worth carrying into every room:

  • Whose gaze are you serving when you pitch, cast, and cut?
  • Which Black characters are being centered — and are they full humans or familiar stereotypes made safe for gatekeepers?
  • When someone says a project is “too political,” “too niche,” or “bad for the algorithm,” whose comfort is really being protected?
  • Are you treating “the industry” as a neutral force, or as a set of human choices you can push against?

If wealth like Epstein’s can quietly seep into agencies, labs, and institutions that decide what gets made and amplified, then the stories you choose to tell — and refuse to tell — become one of the few levers of resistance inside that machine. You may not control every funding source, but you can decide whether your work reinforces a world where Black people are data points and aesthetics, or one where they are subjects, authors, and owners.

The industry will always have its “gatekeepers.” The open question is whether creatives accept that role as fixed, or start behaving like counter‑programmers: naming the patterns, refusing easy archetypes, and building alternative pathways, platforms, and partnerships wherever possible. In a landscape where money has long been used to decide what to love and who to fear, your choices about whose stories get light are not just artistic decisions. They are acts of power.

Advertisement
Continue Reading

Business

New DOJ Files Reveal Naomi Campbell’s Deep Ties to Jeffrey Epstein

Published

on

In early 2026, the global conversation surrounding the “Epstein files” has reached a fever pitch as the Department of Justice continues to un-redact millions of pages of internal records. Among the most explosive revelations are detailed email exchanges between Ghislaine Maxwell and Jeffrey Epstein that directly name supermodel Naomi Campbell. While Campbell has long maintained she was a peripheral figure in Epstein’s world, the latest documents—including an explicit message where Maxwell allegedly offered “two playmates” for the model—have forced a national re-evaluation of her proximity to the criminal enterprise.

The Logistics of a High-Fashion Connection

The declassified files provide a rare look into the operational relationship between the supermodel and the financier. Flight logs and internal staff emails from as late as 2016 show that Campbell’s travel was frequently subsidized by Epstein’s private fleet. In one exchange, Epstein’s assistants discussed the urgency of her travel requests, noting she had “no backup plan” and was reliant on his jet to reach international events.

Screenshot

This level of logistical coordination suggests a relationship built on significant mutual favors, contrasting with Campbell’s previous descriptions of him as just another face in the crowd.

In Her Own Words: The “Sickened” Response

Campbell has not remained silent as these files have surfaced, though her defense has been consistent for years. In a widely cited 2019 video response that has been recirculated amid the 2026 leaks, she stated, “What he’s done is indefensible. I’m as sickened as everyone else is by it.” When confronted with photos of herself at parties alongside Epstein and Maxwell, she has argued against the concept of “guilt by association,” telling the press:

“I’ve always said that I knew him, as I knew many other people… I was introduced to him on my 31st birthday by my ex-boyfriend. He was always at the Victoria’s Secret shows.”

She has further emphasized her stance by aligning herself with those Epstein harmed, stating,

“I stand with the victims. I’m not a person who wants to see anyone abused, and I never have been.””

The Mystery of the “Two Playmates”

The most damaging piece of evidence in the recent 2026 release is an email where Maxwell reportedly tells Epstein she has “two playmates” ready for Campbell.

While the context of this “offer” remains a subject of intense debate—with some investigators suggesting it refers to the procurement of young women for social or sexual purposes—Campbell’s legal team has historically dismissed such claims as speculative. However, for a public already wary of elite power brokers, the specific wording used in these private DOJ records has created a “stop-the-scroll” moment that is proving difficult for the fashion icon to move past.

A Reputation at a Crossroads

As a trailblazer in the fashion industry, Campbell is now navigating a period where her professional achievements are being weighed against her presence in some of history’s most notorious social circles. The 2026 files don’t just name her; they place her within a broader system where modeling agents and scouts allegedly groomed young women under the guise of high-fashion opportunities. Whether these records prove a deeper complicity or simply illustrate the unavoidable overlap of the 1% remains the central question of the ongoing DOJ investigation.

Advertisement
Continue Reading

Business

Google Accused Of Favoring White, Asian Staff As It Reaches $28 Million Deal That Excludes Black Workers

Published

on

Google has tentatively agreed to a $28 million settlement in a California class‑action lawsuit alleging that white and Asian employees were routinely paid more and placed on faster career tracks than colleagues from other racial and ethnic backgrounds.

How The Discrimination Claims Emerged

The lawsuit was brought by former Google employee Ana Cantu, who identifies as Mexican and racially Indigenous and worked in people operations and cloud departments for about seven years. Cantu alleges that despite strong performance, she remained stuck at the same level while white and Asian colleagues doing similar work received higher pay, higher “levels,” and more frequent promotions.

Cantu’s complaint claims that Latino, Indigenous, Native American, Native Hawaiian, Pacific Islander, and Alaska Native employees were systematically underpaid compared with white and Asian coworkers performing substantially similar roles. The suit also says employees who raised concerns about pay and leveling saw raises and promotions withheld, reinforcing what plaintiffs describe as a two‑tiered system inside the company.

Why Black Employees Were Left Out

Cantu’s legal team ultimately agreed to narrow the class to employees whose race and ethnicity were “most closely aligned” with hers, a condition that cleared the path to the current settlement.

The judge noted that Black employees were explicitly excluded from the settlement class after negotiations, meaning they will not share in the $28 million payout even though they were named in earlier versions of the case. Separate litigation on behalf of Black Google employees alleging racial bias in pay and promotions remains pending, leaving their claims to be resolved in a different forum.

What The Settlement Provides

Of the $28 million total, about $20.4 million is expected to be distributed to eligible class members after legal fees and penalties are deducted. Eligible workers include those in California who self‑identified as Hispanic, Latinx, Indigenous, Native American, American Indian, Native Hawaiian, Pacific Islander, and/or Alaska Native during the covered period.

Beyond cash payments, Google has also agreed to take steps aimed at addressing the alleged disparities, including reviewing pay and leveling practices for racial and ethnic gaps. The settlement still needs final court approval at a hearing scheduled for later this year, and affected employees will have a chance to opt out or object before any money is distributed.

H2: Google’s Response And The Broader Stakes

A Google spokesperson has said the company disputes the allegations but chose to settle in order to move forward, while reiterating its public commitment to fair pay, hiring, and advancement for all employees. The company has emphasized ongoing internal audits and equity initiatives, though plaintiffs argue those efforts did not prevent or correct the disparities outlined in the lawsuit.

For many observers, the exclusion of Black workers from the settlement highlights the legal and strategic complexities of class‑action discrimination cases, especially in large, diverse workplaces. The outcome of the remaining lawsuit brought on behalf of Black employees, alongside this $28 million deal, will help define how one of the world’s most powerful tech companies is held accountable for alleged racial inequities in pay and promotion.

Advertisement
Continue Reading

Trending