In the late 1970s, Sonny and Cher sang this cute tune. They were singing to each other. Now our Senators are singing the same song to Wall Street. Brown-Kaufman was a reasonable proposal. It limited the size of banks to a percentage of our GDP. The proposal went down in flames. Why? Wouldn’t limiting bank size actually help the middle class? I thought that’s what Congress wanted to do… help the middle class?
Simon Johnson has more:
The Brown-Kaufman SAFE Banking Amendment proposed a hard size cap on our largest banks, limiting their assets to a very small fraction of the size of our economy. The premise was simple – and could fit on a bumper sticker (or in a campaign flyer for November) – “too big to fail” is too big to exist.
But this proposal to modify the Dodd-Frank financial reform bill failed in the Senate in early May, by a vote of 33-61, with 27 Democrats voting against the idea. Since that time, Democratic supporters have been asking their representatives the obvious question: Why did you vote against Brown-Kaufman?
Interestingly, no senators yet have replied – at least on the record – that the power of the megabanks was too great to be overcome. Instead, there are three main arguments going the rounds.
First, some argue that the Brown-Kaufman would by itself not have completely solved all the problems that can cause our financial system to meltdown. As one senator put it in a recent letter, “[Brown-Kaufman] would not solve the problem of systemic risk and systemically important institutions in a comprehensive manner.” (more…)