End "Too Big Too Fail"

[SiliconJon]

Hey, it's only 20 pages Yup, it's a limit, so market anarchists will not approve. Now World Orderans will also object. But what do you think about it?

THE BILL (PDF)

Senators Kaufman, Casey, Merkley, Whitehouse and Harkin (along with others who may pile on) have introduced a 20-page amendment to actually address "too big to fail."

It is refreshingly simple legislation - 20 pages of common sense.

It limits firm size to 2% of GDP including off-balance sheet vehicles for banks, 3% for non-banks, and forces divestiture of overages. It also requires reporting and testimony before Congress if regulators fail to promptly address violations.

In addition it places a hard cap of 10% of deposits in any one institution (a limit that already exists by the way, but has been wantonly violated by The Fed allowing mergers during the crisis that breached the limits - and yet there has been no requirement to divest.)

This would place a balance-sheet limit of about $280 billion on a bank.

This would put an instantaneous full-stop to the outrageous obscenity called "Wells Fargo", which has $1.7 trillion in off-balance sheet "assets", not to mention the other "big banks" that have hundreds of billions off sheet as well.

We now get to find out who is really for Wall Street reform - and who needs to lose their seat in The Senate.

YouTube - 2010-04-29 Safe Banking Act 2010.mp4


I welcome the transparency, indeed. And the size limitation may well be a good anti-trust measure.

[Whir]

I only made it about 1:40 into the video. Can't stand the way the guy speaks.

Won't this thing do more outright harm than good?

[SiliconJon]

Well, I'm just now covering the item so I'm not entirely sure just yet. Can you expand on the harm you think it will do? I do wish to discuss it.

EDIT: Question mark added to thread title. Discussion and debate is what I seek on this, not yet promotion.

[Whir]

The Market Ticker article mentions Wells Fargo as an example of big banks gone too far. What will happen to Wells Fargo if this bill passes? Is it going to cause them to take a nose dive? Obviously they don't employ as many people as a Ford plant, but it's still going to hurt business overall if they tank, right?

[SiliconJon]

Well, my first reaction when reading the text of the bill was immediate rejection due to the possibility of giving the FED even more power, though I admit I don't fully understand it yet, and I don't want to be a one-note guy - if there's a compromise to be had in the meantime that will help, I'll go for it. Also, any fix is going to sting. The goal is to pay now, profit again later (preferably quickly), rather than this continued staving that has the cost continuously compounding.

I think I posted in haste, though. I need to read the bill a few times and maybe find some big folks' take on it to compare my own thoughts against.