It’s looking increasingly likely that a moderately helpful financial reform bill to address some of the problems of the banking system that led to the financial crisis and the bailouts will pass Congress and be signed by President Obama.
The biggest problem is that it may be Too Weak to Succeed by allowing the megabanks to remain Too Big to Fail, thus insuring that the next cycle of boom, bust and bailout remains baked into the system.
Miles Mogulescu, Entertainment attorney, writer, and political activist
I am absolutely in favor of the Safe Banking Act and appreciate the fact that we still have elected officials like Senators Brown and Kaufman. It’s good to see that there are still members of Congress who have the conviction and courage to stand against the mammoth bank lobby.Anyone who’s alive and capable of coherent thought knows that we need serious reform of big banking in the United States. The Dodd bill, which is now moving before Congress, has some sound measures which will advance that cause, but it also has serious weaknesses. One important failure of Senator Dodd’s bill is the fact that it does little to address “Too Big to Fail,” which is at heart the reason for the bill in the first place.
The legislation proposed by Senators Brown and Kaufman goes straight to the heart of the matter. It deals directly with the fact that, where 15 years ago the 6 largest U.S. banks held assets totaling 17% of the Gross Domestic Product (GDP), they now hold 60% . This single point is by definition the essence of “To Big to Fail” (TBTF). The Safe Banking Act addresses this issue by limiting the size of any single bank to 3% of the GDP.
Of course, there’s no way the big banks want to see this happen. They spend a pile of money trying to ensure that Congress meets their needs — over $20 million between the securities/investment and commercial banking industries thus far in the 2009/2010 election cycle. Together, their spending is second only to lawyers and law firms.
Make no mistake about it, Senator Dodd is big-banking’s number one guy, and his bill caters to the banks by administering just enough regulation to give the appearance of reform without really impacting bank profitability. With the Safe Banking Act pending, we’ll now see much more Republican support for the Dodd bill. They will likely assemble a bipartisan effort to further weaken the bill, push it through and preempt the real reform in the Safe Banking Act.
This does not serve The People. We need to wake up and let our voices be heard. The Safe Banking Act will address TBTF with a hard cap on bank size. It will also help ensure that banks remain solvent by establishing more reasonable leverage ratios, raising the bar from 30:1 to 16:1. These changes are essential to real reform, but they are unlikely to see the light of day in Congress unless We the People apply the pressure.
If you want to see an end to rampant bank greed and investment banking fat-cats stuffing their pockets at the expense of the common taxpayer, then please exercise your rights and go here to sign the petition. I’ve already signed it. I will be calling my senators; I’m posting this article on my blog, and I will inform everyone I know about this important legislation.
Don’t remain a pawn. Together we can make a difference.
Read the Article at HuffingtonPost