Delaware’s U.S. Senator Ted Kaufman touts legislation designed to limit the size of banks to keep them from becoming “too big to fail.”
Delaware U.S. Senator Ted Kaufman is taking advantage of his status as outgoing Senator to tackle some major issues without fear of not being reelected in the fall. Since taking Vice President Joe Biden’s Senate seat, Kafuman has drawn a lot of attention for his stand against mega-banks from national publications including Salon.com, and Bloomberg Businessweek.
Kaufman spoke on the Senate floor earlier this week (video from C-SPAN) about legislation he’s sponsoring with Senator Sherrod Brown (D- Ohio) that would limit the size and leverage of mega-banks. Kaufman says the average size of a commercial bank relative to the GDP has tripled over the last 15 years, something he says was caused not by the growth of community or regional banks, but by the ascension of mega-banks. “The federal government cannot continue to subsidize these mega-banks and permit them to grow by taking on even great risk and speculation.”
Kaufman says in light of the recent economic meltdown, his proposal would add another layer of protection to the financial system and reduce the likelihood that American taxpayers will again be forced to bailout banks that were “too big to fail.” “Why would we want finance institutions this gigantic?” Kaufman said. “The last two years proved beyond dispute that management and risk committees at America’s most prestigious firms were unable to effectively track, measure and mitigate their exposures.”
Kaufman says the bill would still leave the nation with large banks, just not too large that they can’t be managed and regulated.