by Janet Ritz
Rep. Brad Sherman (D-CA) intends to introduce an amendment to the proposed House Financial Services Committee "Too Big to Fail" bill that will require large banks to fund their own insurance against failure. This came after smaller banks and economists raised concerns that the requirements for the smaller banks to pay into the fund would also require those smaller banks to carry the financial burden for the larger banks should they fail -- larger banks that would be helped through crises because they were too big to fail whereas the smaller banks would be left to fail under similar circumstances.
Rep. Brad Sherman (D-Calif.) will introduce an amendment to a bill in the House Financial Services Committee to raise the existing threshold to either $50 billion or $75 billion, he told Huffington Post on Wednesday night. Those thresholds could rise in the future should he make them inflation-adjusted, he said.
Policies and proposed legislation involving banks considered too big to fail have also seen bipartisan criticism which has led to the introduction of legislation to provide more transparency into the lending activities by the Federal Reserve:
House pushes for sweeping audit of the FedBipartisan effort aims to get peek into secretive U.S. central bankWASHINGTON - House lawmakers want to pry open the books of the famously secretive Federal Reserve with legislation that would subject the U.S. central bank to a sweeping congressional audit.The effort is overwhelmingly bipartisan. Hardline conservatives and liberal Democrats have banded together in their criticism of the Federal Reserve as a major power broker in the financial system that does not answer to Congress.
Concern about both Treasury Secretary Timothy Geithner and White House Director of the National Economic Council Lawrence Summer's perceived economic priorities in favor of Wall Street over Main Street have also led to calls for resignations by members of Congress:
Since Rep. DeFazio's call for the resignations, several Republican members of Congress have upped their rhetoric insisting on the two administration officials' resignation.
Treasury Secretary Geithner responded that the problems stemmed from Bush Administration policies.
Rep. Sherman has raised prior concern about the financial activities of the Treasury and the Federal Reserve:
Rep. Brad Sherman of California, who twice voted against the TARP, says "resolution authority and bailout authority are two different things."Though Sherman said he would reserve full judgement until the changes are unveiled, he's worried that a poorly constructed bill will "provide the creditors and counter parties with an implicit government guarantee paid for by the taxpayers" and that the 20 biggest firms, by being seen as too big too fail, would enjoy a lower costs of capital, creating an unfair market advantage.
Rep. Sherman's amendment to protect smaller and mid-sized banks is expected to be introduced on Thursday, November 19, 2009.
Janet Ritz, the publisher and managing editor of The Environmentalist, has been nominated as an Environmental changemaker by change.org.