Sen. Sherrod Brown and Sen. David Vitter, the unlikely duo pushing the “Too Big to Fail” plan in the U.S. Senate, are applauding a decision by federal regulators to increase the mandatory leverage ratio for banks -- otherwise known as the amount of liabilities banks are permitted to take on.
The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Federal Reserve today announced plans to require big banks to have common equity equal to a minimum of five percent of their assets. Such rules are aimed at making sure banks have adequate equity to survive a severe downturn. Brown, D-Ohio and Vitter, R-La., say the move is a step toward the higher standards pushed in their bill.
According to Brown’s office, the nation’s four biggest banks -- JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo -- are nearly $2 trillion larger today than they were before the 2008 financial crisis. Brown says that’s because the government has deemed them “too big to fail,” allowing them to borrow at a lower rate than regional banks, community banks, and credit unions. He said that’s given them an unfair advantage, and says it amounts to a taxpayer-funded subsidy.Things Sen. Brown is happy about today, Part 2 »