Good for them.

Now it’s time to see if the Democrats mean it or if it’s time to play the rotating villian game to kill it.

The Senate – where good bills go to die. Let’s hope Reid grows a spine and soon. He’s running out of time to do anything productive.

The amendment pertaining to a 3%-of-GDP cap on any institution’s “size” sounds like it might be reasonable. As to the other amendment – which requires it seems banks to limit leverage to what they can back with a certain fractional reserve – may be good, but I need to hear more about the specific 6% figure, whether or not this good.

Restoring the Glass-Steagall Act – which was undone during the Clinton years – also sounds good.

Now, let’s see which of these amendments actually survive longer than 10 minutes …

Maybe they have rotating heros as well.

Brown did lots of talk and appeared on lots of shows during the HCR Kabuki and it amounted to a bunch of talk, some free publicity for him, and probably some increased fund raising. I expect more of the same from our rhetorical champions of inaction.

So far, my money is on a reprise of villain rotation.

I am wating for someone in Congress to introduce the Safe Cracking act.

Nice reporting, D-Day. Any idea what people like Professor Black are saying about it, or is it too early for that?

“Obtaining a carve-out isn’t rocket science,” said a Republican financial services lobbyist. “Just give Chairman Dodd [D-Conn.] and Chuck Schumer [D-N.Y.] a s***load of money.”

Ah, markets at work: Wall Street has a s***load of money and needs loopholes, Washington has a s***load of loopholes and needs money.

firedog please, you’re 11 years too late :D

This is extremely encouraging news, and with Kaufman’s name on it (along with SHERROD, not the ‘other’ Sen. Brown), has credibility with me.

I’ve called both my Senators offices, and it seems the staff that I spoke with are still learning about it, but Kaufman’s support seemed to resonate.

And here’s hoping that Cantwell will perhaps co-sponsor.

The bill would place a cap on any financial institution, limiting their total assets to 3% of GDP (that would lower to 2% for banks, as opposed to 3% for non-bank institutions). Currently, the 6 largest banks have holdings that equal 63% of GDP. The Safe Banking Act would also impose a 10% cap on any bank holding company’s share of insured deposits. Bank holding companies and “selected nonbank financial institutions” would have a leverage limit of 6%, meaning that they would not be able to lend out more than around sixteen dollars for every dollar of capital in house.

Honestly, this almost makes me wonder whether Kaufman or his staff have been spending time at baselinescenario’s blog, or reading masaccio’s FDL posts, as well as Yves Smith at nakedcapitalism.

Because this is structural, and focused on genuinely dealing with the issue of competition, it’s incredibly encouraging. I honestly didn’t think the Dems would actually come through and propose something this structural. (I’m very glad to be surprised.)

Now don’t go getting sexually aroused here. This is all just more kabuki. Sherrod is just angling for a ride on Air Force One. He’s jealous that Dennis Caving-inich got one and he didn’t.

President Pinocchio’s “savvy” bosses on Wall Street will never accept this. So OLiar will have to gather up his political muscle once again to snuff out any hope for reform that actually benefits the people.

Anybody who thinks that the bankers have less influence and power than the health care lobby is just plain delusional. The only thing that will break up Gubmint Sachs, JPMorgan, Citi, etc., is armed insurrection on a nation-wide basis. (That ain’t a-gonna happen, either. We’re too gutless.)

Thanks (I think) for a loud guffaw. If I can’t cry, I might as well laugh.

Have to agree. This *sounds* great (short of re-instituting Glass-Steagle), but hey: isn’t this just the 2d or 3rd Scene of Act I of the Mikado Financial Reform Giant Kabuki Show????

zzzzzzz wake me when it’s over; every single D has caved and run crying home to mommy and/or daddy about how meeeeeaaaaannnnn those nasty-wasty Rs are, and they had no choice, no choice I tells ya, ta roll over and take it where the sun don’t shine, so that our Wall Street overlords could SCORE BIG once again.

amirite?

. . . Whether or not it will truly end too big to fail can be seen in whether or not this gets added to the overall package.

Whoomp, there it is.

Thanks for the update, and all your work.

US GDP in 2009 was $14.25 trillion. 2% of that would $285 billion. 3% of it would be $427.5 billion. This is considerably over the $100 billion cap we have been discussing.

Thanks. Glad I brighten your otherwise probably morose day. (Morose, what with the latest kabuki and all.)

I agree a structural change is needed – with financial products that are insurance being treated under insurance company rules and absolute size rules (which we already have as to deposits) being improved (Vermont’s Bernie Sanders may introduce similar concept legislation – but I expect neither to get past the bank lobby).

Meanwhile all the fuss about the Glass-Steagall Act of 1933 misses the point and is just more Clinton bashing from those who I suspect never worked in management in the industry. The crisis was caused by derivative product and leverage/margin deregulation and that did not come from the Gramm–Leach–Bliley Act that the repealed portions of Glass-Steagall(BTW – check out the party affiliation of each – passed the Senate, by the way, 54-44 on a nearly party-line vote)

As always, one must look to the GOP – not the Clintons – to find how corporations screw us really bad (Dem’s tend to allow only minor hurts to us from the corporations).

The Bush41 in 1992 gave us the Futures Trading Practices Act of 1992 (FTPA)) which gave the CFTC authority to exempt transactions from the exchange trading requirement and other provisions of the CEA.

At the time I and others like New York Insurance Superintendent Eric Dinallo argued credit default swaps should have been regulated as insurance and that the CFMA removed a valuable legal tool by preempting state “bucket shop” and gaming laws that could have been used to attack credit default swaps as illegal.

In 2000 the GOP Senate noted that the then CEA’s rules did not stop states from stopping a credit default swap on a “non-exempt security” (i.e. an equity security or a “non-exempt” debt obligation that qualified as a “security”). The Commodity Futures Modernization Act of 2000 (CFMA) stated that most over-the-counter derivatives (“OTC derivatives”) transactions between “sophisticated parties” would not be regulated as “futures” under the Commodity Exchange Act (CEA) or as “securities” under the federal securities laws. Dem attempts to change this were portrayed in our media as adding risk to our system “because those transactions would go overseas where we could not regulate them” – stupid because we were not going to regulate them under the Bill, but the Wall Street Journal was not unbiased. Indeed the 2002 DiFi (D-CA) energy regulation change failed in 2002 and was not passed until 2008.

Look at a chart of the volume of derivative trading – it rises slowly but does not take over until Wall Street was totally safe – and that period began in 2002.

I’m curious; is there a distinct advantage to the $100 Bn figure as opposed to a percentage of their worth? And just who is doing the insuring? And who will be betting on the insurance other than the insurer?

The limit is whatever has sales appeal – if we do not have government financed election campaigns, it seems hard to find a number that will mean banks will have less control of our politics, and without controls on writing insurance and either having no reserves for that insurance or having minimum “collateral” for those “derivatives”, it is hard to see how the system as a whole is safer.

The assumption is that only a handful of banks did these derivatives and the same number of banks with less assets will do less damage. If BofA is now 10 smaller BofA’s, how does this stop all 10 from doing derivatives?? Indeed no bank will not do what the others are doing.

It is however a nice punishment and likely to cut down on CEO pay, so I support the idea.

Of course a smaller size makes “too big to fail” harder to use for doing bailouts instead of closing the bank.