Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsTaibbi: Too-Big-to-Fail Takes Another Body Blow
Minds are changing on Too Big to Fail. A month ago, it was just something in the air. Now, it looks like we're headed for a real legislative confrontation. And man, is the finance sector freaking.Last week, on April 24th, Democratic Senator Sherrod Brown of Ohio and Louisiana Republican David Vitter introduced legislation called the "Terminating Bailouts for Taxpayer Fairness Act of 2013 Act," or the "Brown-Vitter TBTF Act" for short. The bill is a gun aimed directly at the head of the Too-Big-To-Fail beast.
During the Dodd-Frank negotiations a few years ago, Brown teamed up with Delaware Democrat Ted Kaufman to introduce an amendment that would have physically capped the size of the biggest banks. The amendment was bold and righteous but was slaughtered on the floor by a 61-33 margin, undermined by leaders of both parties 27 Democrats voted against it.
Brown-Vitter offers a different and, in a way, more elegant solution to the problem than Brown-Kaufman. Rather than impose size limits, it simply insists that banks with over $500 billion in assets maintain higher capital reserves than are currently required. Companies like J.P. Morgan Chase, Wells Fargo, Morgan Stanley, Goldman Sachs, Citigroup and Bank of America will have to keep capital reserves of about 15 percent, about twice the current amount.
The bill only has such tough requirements for just those few megabanks, which sounds unfair, except that the aim of the bill, precisely, is to level the playing field. Right now, the biggest U.S. banks enjoy a massive inherent market advantage in that they're able to borrow money far more cheaply than other banks, because everybody on earth knows the government will never let them fail and will always bail them out in a pinch, making their debt essentially U.S.-government guaranteed. Studies have shown that these banks borrow money at about 0.8 percent more cheaply than other banks, and that this implicit government subsidy is worth about $83 billion a year just to the top 10 banks in America. This bill would essentially wipe out that hidden subsidy and make the banks bailout-proof. /snip
Read more: http://www.rollingstone.com/politics/blogs/taibblog/too-big-to-fail-takes-another-body-blow-20130501#ixzz2S5otAkFd
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
7 replies, 1802 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (47)
ReplyReply to this post
7 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
Taibbi: Too-Big-to-Fail Takes Another Body Blow (Original Post)
gateley
May 2013
OP
What happened in Cyprus? Did the banks just take over the deposits? I wonder if the banks here
demgrrrll
May 2013
#4
Maybe I am too cynical, but I do not see real reform happening! The politicians are too
Dustlawyer
May 2013
#5
DirkGently
(12,151 posts)1. It would be a start. (nt)
ReRe
(10,597 posts)2. Bailout-proof?
...Sounds good to me! Problem is...getting it passed.
RainDog
(28,784 posts)3. k&r n/t
demgrrrll
(3,590 posts)4. What happened in Cyprus? Did the banks just take over the deposits? I wonder if the banks here
would try that if they could not get a bail out.
Dustlawyer
(10,494 posts)5. Maybe I am too cynical, but I do not see real reform happening! The politicians are too
compromised and dirty!
Bake
(21,977 posts)7. I'm with you on that.
The system is just too damn filthy dirty.
Bake