Senator Brown Says His Push to Limit Bank Size Gaining Support
Business Week – May 1 (Bloomberg) — Senator Sherrod Brown said support is growing for his proposal to reduce the size of U.S. banks as part of broader legislation that would revamp rules governing Wall Street.
The Ohio senator said his amendment, introduced April 29 with fellow Democratic Senator Ted Kaufman of Delaware, would probably force five banks to divest some regional branches or exit a line of business.
“As people hear the debate on this, I think senators of both parties increasingly are going to join Senator Kaufman and me in moving forward on this amendment,” Brown, a member of the Senate Banking Committee, said in an interview with Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
He also said, “I don’t think we do yet” when asked whether he had the votes to pass the provision. “I think a week ago we weren’t even close,” he said. “Going into this weekend we’re closer.”
The amendment would limit the size of banks by imposing a 10 percent cap on a bank holding company’s share of U.S. insured deposits and set a 6 percent leverage limit for those firms and some nonbank financial firms. It also would limit the size of non-deposit liabilities at banks to 2 percent of U.S. gross domestic product.
“We need to make sure the banks don’t get so big” that they can be “a real threat to the system,” said Brown, 57.
Affected Banks
The banks that may affected by Brown’s plan are Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co., according to Meghan Dubyak, a spokeswoman for Brown. Those are the five biggest U.S. banks by assets.
Senate lawmakers agreed April 28 to begin debate on the legislation that aims to strengthen oversight of Wall Street in response to the worst financial crisis since the Great Depression, which led to a $700 billion rescue package for banks such as New York-based Citigroup and Charlotte, North Carolina- based Bank of America.
