Washington -- One of the Senate's most conservative members joined with one of its most liberal to urge federal regulators Wednesday to increase minimum capital standards for big banks. The request came from Sen. David Vitter, R-La., and Sen. Sherrod Brown, D-Ohio., in a letter to Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the...
Washington -- One of the Senate's most conservative members joined with one of its most liberal to urge federal regulators Wednesday to increase minimum capital standards for big banks. The request came from Sen. David Vitter, R-La., and Sen. Sherrod Brown, D-Ohio., in a letter to Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Commission.
Sen. David Vitter, checks his cell phone on Capitol Hill.
They ask the regulators to reject what they call an overly complex proposal recommended by a commission and focus instead on higher capital requirements. The idea, the two senators said, is to prevent failures by under capitalized banks that can lead to a repeat of the massive bank failures and bailouts that followed the financial collapse in 2008.
Such a policy, he said, would also be good for community banks that haven't engaged in the rampant speculation of many of the country's biggest banks.
Both senators admitted that they disagree on most issues. Vitter joked to a reporter that he and Brown are sort of the "odd couple" of the Senate.
Brown, who is engaged in a tough re-election fight in Ohio, told the New York Times he decided to work with Vitter after admiring Vitter's tough questioning during a Senate Banking Committee hearing last summer of Federal Reserve Chairman Ben Bernanke. Both senators are members of the banking panel.
They joined together in August to urge higher capital requirements and again on Wednesday to reiterate their request.
"This is not complicated finance," Vitter said. "If a huge bank wants to provide loans and investments for billions of dollars, then they should be required to keep a certain amount of reserves on hand to absorb any rapid or sudden market turns. They certainly shouldn't empty their bank vaults, fail and then turn to the federal taxpayer for a bailout because they didn't keep some emergency savings."
"Louisiana families certainly have to keep emergency savings - why shouldn't these megabanks?"