By Jack Torry
-
Washington Bureau
WASHINGTON —
Sen.
Sherrod Brown introduced a controversial bill Wednesday designed to
reduce the possibility that taxpayers would ever again have to bail out
some of the nation’s largest banks.
Joined by his Republican co-sponsor, David Vitter of Louisiana, at a news conference on Capitol Hill, Brown’s bill would require the nation’s largest banks to set aside a greater percentage of capital to protect the institutions against a major failure.
“If mega banks want to be large and complex, that’s their choice,’’ said Brown, D-Ohio. “But taxpayers shouldn’t have to subsidize their risk taking. If big banks fail, their executives and their investors should pay the price. This may be bad news for a few mega banks but it’s good news for American’s banking system.’’
Although the bill would not have as much impact on regional mid-sized banks such as Huntington of Columbus and Fifth-Third of Cincinnati, it is aimed at the largest U.S. banks – JP Morgan Chase, Bank of America, Citigroup and Wells Fargo.
Federal regulators currently set capital requirements for banks. Since the 2008 financial collapse, Brown and other lawmakers expressed fears that large banks continue to make risky investments, confident that the federal government will bail them out.
The bill provoked sharp objections from banking organizations. Jeff Sigmund, a spokesman for the American Bankers Association in Washington, said the Brown bill “would harm banks and their customers, local communities and the broader economy.’’
Sigmund warned that “forcing our nation’s banks to shrink through higher capital requirements would have unintended consequences that would inhibit economic growth.’’
The bill faces opposition from a number of key senators and has received a cool reception from the U.S. Department of the Treasury. Vitter acknowledged that “there are obviously interests working overtime against this. But I think clearly there has been building momentum for this approach over the last year.’’
If the bill becomes law, banks with more than $500 billion in assets would have to set aside 15 percent of their capital against their assets. Medium-sized banks would need 8 percent in capital against their assets.
Joined by his Republican co-sponsor, David Vitter of Louisiana, at a news conference on Capitol Hill, Brown’s bill would require the nation’s largest banks to set aside a greater percentage of capital to protect the institutions against a major failure.
“If mega banks want to be large and complex, that’s their choice,’’ said Brown, D-Ohio. “But taxpayers shouldn’t have to subsidize their risk taking. If big banks fail, their executives and their investors should pay the price. This may be bad news for a few mega banks but it’s good news for American’s banking system.’’
Although the bill would not have as much impact on regional mid-sized banks such as Huntington of Columbus and Fifth-Third of Cincinnati, it is aimed at the largest U.S. banks – JP Morgan Chase, Bank of America, Citigroup and Wells Fargo.
Federal regulators currently set capital requirements for banks. Since the 2008 financial collapse, Brown and other lawmakers expressed fears that large banks continue to make risky investments, confident that the federal government will bail them out.
The bill provoked sharp objections from banking organizations. Jeff Sigmund, a spokesman for the American Bankers Association in Washington, said the Brown bill “would harm banks and their customers, local communities and the broader economy.’’
Sigmund warned that “forcing our nation’s banks to shrink through higher capital requirements would have unintended consequences that would inhibit economic growth.’’
The bill faces opposition from a number of key senators and has received a cool reception from the U.S. Department of the Treasury. Vitter acknowledged that “there are obviously interests working overtime against this. But I think clearly there has been building momentum for this approach over the last year.’’
If the bill becomes law, banks with more than $500 billion in assets would have to set aside 15 percent of their capital against their assets. Medium-sized banks would need 8 percent in capital against their assets.
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We have two reporters working full-time in Washington to bring you the latest news you need on politics, government spending and military affairs. Follow us on Twitter at @Ohio_Politics
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