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A bipartisan group of four Senate Banking Committee members, including Elizabeth Warren and Bob Corker, have introduced legislation designed to spur reform of the government-sponsored enterprises.
March 14 -
Sens. Sherrod Brown, a liberal from Ohio, and David Vitter, a conservative from Louisiana, are an unlikely pair. But they have forged a working alliance and are committed to raising capital requirements on the biggest banks and reducing their size.
March 11
WASHINGTON — The Senate is expected to pass two budget amendments Friday designed to break up the big banks and prohibit the use of certain fee hikes at Fannie Mae and Freddie Mac to reduce government spending.
The chamber is hosting what's known colloquially inside the Beltway as a "vote-a-rama" on Friday, allowing lawmakers to vote rapid-fire on attaching any number of amendments to its budget blueprint. None of the amendments, like the budget plan itself, will carry the force of law, but the process can serve as a test balloon for future legislation. There are currently hundreds of amendments to be considered, Budget Committee Chairman Patty Murray, D-Wash., said Friday. This process could continue into Saturday.
Sens. David Vitter, R-La., and Sherrod Brown, D-Ohio, are expected to introduce an amendment that would require the government to assess and reduce any subsidy or funding advantage for banks with $500 billion or more in assets, according to draft legislation circulated by Jaret Seiberg, a policy analyst at Guggenheim Securities. Spokespeople for Vitter and Brown did not respond to requests for comment on the amendment.
"Though not mentioned in the amendment, the idea is for regulators to use capital surcharges, unsecured debt and similar measures to eliminate the advantage," Seiberg said in a note Friday afternoon. "Our view is that this type of plan represents a real threat to the six mega banks as it is designed to eliminate the so-called too-big-to-fail subsidy that conservatives and liberals despise."
Sen. Tim Johnson, D-S.D., the Banking Committee's chairman, and Sen. Mike Crapo, R-Idaho, the panel's ranking member, introduced an amendment Friday that would prohibit the use of increases to the government-sponsored enterprises' "guarantee fees" to offset additional government spending.
"We are pushing to get it adopted," said a committee aide. The measure is co-sponsored by all 22 members of the banking panel.
A coalition of lawmakers, including Sens. Bob Corker, R-Tenn., Mark Warner, D-Va., and Elizabeth Warren, D-Mass., along with Vitter, introduced legislation earlier this month that would address the same issue and prevent the sale of Treasury-owned senior preferred shares without congressional authorization.
Both amendments are expected to pass, Seiberg predicted in his analyst note.
