The battle over "too big to fail" has continued to show surprising momentum nearly three years after the passage of the Dodd-Frank Act, a bill that was supposed to put an end to the debate.
Yet this year the debate has erupted anew, with one bill already introduced in the Senate to break up the banks and another expected shortly to raise their capital standards from the unlikely bipartisan team of Sen. Sherrod Brown, D-Ohio, and Sen. David Vitter, R-La.
Fueled by comments from Attorney General Eric Holder and a series of mistakes from the largest banks, a growing coalition of voices are advocating a breakup of the biggest institutions. Yet as Barbara Rehm, American Banker's editor-at-large, has pointed out, there are significant questions remaining about how this could be done and what its impact would be.
It also remains unclear whether the momentum is sufficient to pass legislation.
"There are always a lot of issues on the Washington launch pad, the question is what ignites the engine," said Karen Shaw Petrou, the managing director of Federal Financial Analytics. "I think 'too big to fail' is on the pad and it's fueled - what I don't know is whether there is a spark."
To shed more light on the subject, American Banker has teamed up with Federal Financial Analytics, a leading policy analysis firm, to convene a forum dedicated to whether "too big to fail" still exists and, if so, what to do about it. On April 23, we'll hear directly from Sens. Brown and Vitter in back-to-back speeches, followed by an analysis provided by Petrou, on its potential impact. (Here's a glimpse of her take on the pro and cons of an early draft Vitter-Brown bill.)
Then experts on all sides of the debate will discuss what impact the Brown-Vitter legislation will have on the banking industry.
"We want a constructive debate that focuses not just on the rhetoric but rather on the detailed rationale, particularly with regard to the consequences of action," said Petrou. "It's easy enough to agree that no bank should be 'too big to fail.' Everyone, including the very biggest banks, agrees on that. The real issue, which I hope this forum develops, is now what? Is there a policy response needed to achieve this universally shared goal?"
The forum will be held at the National Press Club, but is by invite-only. It will be live-tweeted by American Banker reporter Donna Borak at @donnaborak on Tuesday morning, followed by reporting and analysis on the roundtable.