Kaufman: Congress Must Deal with “Too Big To Fail”
March 22, 2010
WASHINGTON, D.C. – Senator Ted Kaufman (D-DE) released the following statement Monday after a financial regulatory reform bill was reported out of the Senate Banking Committee:
“Unless Congress deals meaningfully with the mega-banks that are literally ‘too big to fail,’ the American taxpayer will unfortunately remain their ultimate guarantor. A resolution authority, which I support, is a necessary, but not a sufficient, step. We must separate the activities of federally-insured commercial banks from the speculative activities of investment banks.
“Unless we do so, the taxpayer safety net will remain beneath Wall Street firms who walk across the high-wire of speculative investments in search of ever greater profits. While investment banks and other non-bank players should remain free to take greater risks, we need strict limits on their liabilities and leverage to ensure that their financial acrobatics do not once again topple the entire financial system.
“These mega-banks are simply too big to manage, too conflicted and therefore too complicated to regulate. As a result, unless we break them apart, they will remain too large and interconnected for the government to believe that a failing firm won’t take down the rest. And so once the next inevitable financial crisis occurs, the American taxpayer will again need to step into the breach.”
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