Matt Taibbi: Too-Big-to-Fail Takes Another Body Blow

too big to jail

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.

2 Responses to “Matt Taibbi: Too-Big-to-Fail Takes Another Body Blow”
  1. HELL NO, No More Bankster Bailouts says:

    This bill will need to be very specific in defining what the regulators are allowed to accept as “capital reserves”. Accounting principles taught in school are not too big for the TBTF to redefine. If the bill passes, you KNOW the banksters will otherwise try to redefine “Capital Reserves” to their benefit so they can use assets they don’t actually own, just as they have had mortgage paper they don’t really own on their books.

    Until the TBTF and Too Big to JAIL (TBTJ) are indeed prosecuted, this will continue to be a game to them in which they show us THEY are really the ones who control the supposed ‘regulators’.

  2. Sam says:

    Wow-great article. Really hope this legislation goes through!!

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