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Senators Brown, Kaufman Introduce 'Too Big To Fail' Amendment

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defendandprotect Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:36 AM
Original message
Senators Brown, Kaufman Introduce 'Too Big To Fail' Amendment
Senators Introduce 'Too Big To Fail' Amendment
Brown, Kaufman Introduce The Safe Banking Act Of 2010
by David Dayen - Firedoglake.com

In a conference call with reporters, Sens. Sherrod Brown (D-OH) and Ted Kaufman (D-DE) introduced a bill, The Safe Banking Act of 2010, which would mandate hard leverage and size caps on financial institutions and force the breakup of many of the largest mega-banks. The duo planned to introduce their legislation as an amendment to the financial reform bill expected next week.

Sens. Sherrod Brown (D-OH) (pictured) and Ted Kaufman (D-DE) introduced a bill, The Safe Banking Act of 2010, which would mandate hard leverage and size caps on financial institutions and force the breakup of many of the largest mega-banks. The bill would place a cap on any financial institution, limiting their total assets to 3% of GDP (that would lower to 2% for banks, as opposed to 3% for non-bank institutions). Currently, the 6 largest banks have holdings that equal 63% of GDP. The Safe Banking Act would also impose a 10% cap on any bank holding companys share of insured deposits. Bank holding companies and selected nonbank financial institutions would have a leverage limit of 6%, meaning that they would not be able to lend out more than around sixteen dollars for every dollar of capital in house.

In his opening statement, Brown said If were going to prevent big banks from putting our entire economy at risk, we need to place sensible size limits on our nations behemoth banks. We need to ensure that if banks gamble, they have the resources to cover their losses. Sen. Kaufman, who has been a hero on this issue for his strong stands against too big to fail, added that this is exactly what we need, because financial institutions dont need this kind of size to compete internationally, and they just put the nations financial system needlessly at risk. He explained that we cannot leave the question of size and leverage caps to the regulators, because they already have the authority under existing statutes to institute these size and leverage caps, and they havent done it.

http://news.firedoglake.com/2010/04/21/brown-kaufman-introduce-the-safe-banking-act-of-2010/
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RaleighNCDUer Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:44 AM
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1. Why can't we simply un-repeal Glass Steagle?
Has the financial sector been fundamentally changed that would make it impossible to simply put back what was taken away, go back to the old rules that kept this shit from happening?
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Cant trust em Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:51 AM
Response to Reply #1
2. I was listening to someone from the Brookings Institution talk about why it was outdated
But honestly, I can't remember exactly why. Financial is not exactly my strong suit, so I'll need to hear that piece again to really understand it.
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defendandprotect Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:45 PM
Response to Reply #1
4. I've never heard there would be a problem reinstating Glass-Steagall . . .
but when you feel intimidated, remember that Wall St. is simply a large gambling

casino right now -- not based on investment in businesses, but exploitation of stocks/

prices -- labor.

And the dollar bill is simply an artificial entity -- we could go back to sea shells --

wouldn't matter. The problem is juding everything by the yardstick of a dollar bill!

:)
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TomCADem Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:48 PM
Response to Reply #1
5. Isn't The Proposed Law Prohibitting Banks From Trading Derivatives...
...a step in that direction? I guess we could just call the whole thing Glass Steagall II.

The Glass-Steagall Act prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. The reforms on the table are a step in that direction, and Blanche Lincoln's proposals, which garned a vote from Grassley, have gone further than many thought possible a few weeks ago.
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SocialistLez Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:53 AM
Response to Original message
3. Why does it have to be an amendment?
I would rather see it as ONE bill rather than putting it in this big financial reform bill.
I hope the financial reform bill passes (despite it's shortcomings) but I am not 100% sure it will pass.
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laughingliberal Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-22-10 10:51 PM
Response to Original message
6. K & R nt
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