My Sunday Washington Post Business Section column is out. This morning, we look at the question: Can two senators end ‘too big to fail’?

Here’s an excerpt from the column:

“Just how much of a subsidy are the banks receiving? An International Montetary Fund Working Paper quantified it as creating an 80 percent basis point advantage to TBTF banks. A 2012 FDIC study found similar advantages. The implicit government guarantee that these banks would not be allowed to fail allowed them to obtain credit at a more advantageous rate. Bloomberg calculated that this amounted to a taxpayer subsidy of $83 billion a year to the 10 largest U.S. banks, ranked by assets — and $64 billion to the five largest. At the request of Brown and Vitter, the Government Accounting Office is trying to more precisely quantify the annual subsidy to megabanks from the U.S. government.

In this column, I want to look at two broad issues: First, what does the legislation (TBTF Act, S. 798) purport to do? How would it affect the competitive landscape for community and regional banks? Could it prevent future megabank bailouts?”

Good stuff . . .




Can two senators end ‘too big to fail’?
Barry Ritholtz
Washington Post, May 12, 2013

Category: Apprenticed Investor, Bailouts, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Brown & Vitter Try to End ‘Too Big to Fail’”

  1. RW says:

    A worthy goal but, given the corrupt miasma and faux ‘bipartisanship’ gripping Washington DC, Bill Black describes the more probable output of the congressional cloaca IMHO:

    Bill Black: Brown-Vitter Will Not and Cannot Work but it is Criminogenic

    Under Obama, bipartisan bills have a dismal fate because the Democrats negotiate away key elements necessary to create a good bill and add provisions that make parts of the bill harmful – just to pick up a few token co-sponsors – and then the Republicans kill good parts of the bill anyway and try to enact the bad parts.

    Brown-Vitter (BV) exemplifies all three problems. It would fail to achieve its desirable goals even if it became law. It would help the largest fraudulent banks continue to cripple effective examination. The Republicans will kill the well-meaning parts of the bill and try to enact the bad parts of the bill that are so bad that they are criminogenic.

  2. Internet Tourettes says:

    A good logical approach but “non-binding resolution.”

  3. JEHR says:

    RW hit the nail on the head. Black tells all the many ways that the BV bill will not work and, in fact, will make things worse. Why don’t more people use the expertise of William K. Black when they create these bills?

  4. Moss says:

    I think they would need to outlaw naked CDS for this to work. Make them all unwind them. The derivatives and CDS ‘books’ of the banksters are the known unknowns.

  5. milbank says:

    That Brown-Vitter or any legislation like it has become necessary no less unattainable reflects the failure of the “Dream” and exposes further the reality of our fascist republic.