Last week, Kentucky Senate candidate Jack Conway told me that he supported breaking up the big banks as an extension of financial reform. He stressed that the largest half-dozen firms only grew since the financial crisis, accumulating 70% of total GDP in assets, and that the Justice Department’s anti-trust division and the FTC needed to do their jobs, which Congress could do as well by mandating a break-up.

Now, another Senate candidate has come out expressing support of such a measure, albeit with an emphasis elsewhere. Alexi Giannoulias, a former community banker who has taken some hits during the campaign for his roots at his family’s Broadway Bank (which was eventually shut down and taken over by the FDIC), has re-stated his support for the Brown-Kaufman amendment, which would have reduced the size and leverage of the largest financial firms. Although, as you can see from the statement from Giannoulias’ campaign, which I’m reprinting in full, the Illinois Senate candidate, currently the State Treasurer, believes that higher capital requirements would be the main factor in reducing the danger of too big to fail.

Alexi supported Brown-Kaufman and supports continued efforts to reduce the size of big banks. But he knows that it’s not just about size. It’s really about risk. What can have a real impact on preventing another crisis is higher capital requirements so that risks are properly leveraged. In other words, we can limit the size of banks from mega-behemoths to just behemoths but ultimately it’s greater capital requirements that will really put an end to too big to fail. By imposing such capital requirements, you put banks themselves on the line for the risks they take. Naturally then, they’ll be smaller and do less to threaten the overall financial stability of financial markets. So that’s a long way of saying yes, Alexi supports Brown-Kaufman, but it’s not a silver bullet or the sole anecdote to the problem.

Of course, Brown-Kaufman would have imposed a 6% leverage limit on banks, which gets at the same issue as capital requirements. The focus on capital requirements puts Giannoulias in a camp with Paul Krugman and, actually, Tim Geithner and Treasury, who similarly stressed capital over size. But Giannoulias distinguishes himself with support specifically for Brown-Kaufman.

During the primaries, Giannoulias did warn about the growth of financial institutions post-crisis, saying in written answers to the Chicago Tribune’s editorial board that he saw a troubling trend:

I do not believe the system is any better today than it was before the crash. In fact, the country’s four largest banks have only gotten larger and now account for nearly 40 percent of total banking deposits and issue half of the country’s mortgages. If one were to fail again in the future, the resulting economic storm would be even more severe than the last. As part of my comprehensive Future Works economic plan, I outlined the steps that I would take to avoid this crisis from recurring: First, we must proactively address the threat of “too big to fail” institutions rather than waiting for the next crisis to strike [...] I believe that we need a proactive plan to protect consumers and the American economy from another financial catastrophe caused by Wall Street’s thirst for greater profit. To achieve this, I would call for enhanced supervision of the most fragile institutions, for greater capital requirements at financial firms, for immediate contributions by large financial institutions to an “emergency fund” that could be tapped for any future bailout, and for a “living will” that would provide a plan to wind down any institution that is close to failure.

So there’s an awareness that runaway bank size is contributing to extreme risk. But mainly, Giannoulias wants to manage risk.

If he wants to do so, he needs to key in on the Basel III negotiations, where the action on capital requirements has moved, and which under FinReg US regulators can immediately implement. Recent reports have shown that the Basel negotiations, which started out relatively strong, have slid back amid fierce lobbying from global banks. I’m not expecting an Illinois Senate candidate to fly to Switzerland and save the day, but clearly the success or failure of Basel will determine the success or failure of managing risk in the financial system. And right now, it’s looking like a failure.

Beyond that, not just for reasons of risk, but reasons of political economy, the idea that banks as big as the top firms can basically control the government, it’s imperative that we break the financial oligarchy and return to a saner, more boring banking system. Giannoulias supports that, according to this statement.