Can Future Bank Bailouts Be Avoided?

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-- -- Understood this problem for nearly five years so when are we gonna get rid of too big to fail I would very much like to have the confidence that.

We could close down a large institution without causing damage to the rest of the economy if -- enough.

I know we're both trying to go in the same direction I'm just pointing out -- all that space in between.

What's happening is the big banks are getting a terrific break.

And a little banks -- just get smashed on this they're not getting that kind of break.

And that has long term impact for all of the financial system.

That was Democrat senator Liz -- -- a lot like a Republican colleagues well question Ben Bernanke about big banks.

Getting bigger breaks despite a slew of new rules and regulations.

Could this be one area in which Republicans -- Democrats who worked together to actually make something better joining me -- Louisiana Republican senator David.

Bitter senator welcome good to see so it's inevitable as we invite was was -- -- -- -- -- because you look at the records in the top five banks are more concentrated than ever.

Going in exactly the opposite direction that Dodd-Frank wanted to take us.

Absolutely that's what I've been saying for a year and a half plus that's what Sherrod Brown.

Another Democrat on the banking committee with -- I'm working very closely on some legislation to try to correct because that's what he's been -- For over a year and a half and this is a growing bipartisan.

Consensus.

Okay civilian -- we agree senator that things are wrong they're going in the wrong direction despite these new regs and rules so what do we do how do you guys you agree on what's wrong do agree on.

How to change things.

Yeah what Sherrod brown and -- are concentrating on are higher capital requirements for the mega banks.

That would even the playing field also protect the tax -- Put protections in place market force protections in place to try to avoid bailouts in the future.

Now Liz Warren has -- suggestion that bank should get this advantage which has been quantified.

Rabbi Solomon is has as a kind of insurance.

Against -- she quantify is that to someone like 56 billion dollars apparently comes from a study by the by the IMF if she wants banks to pay this amount to kind of equal the playing field -- the smaller banks what do you think about that.

I don't think that's a good idea -- -- -- the figures more like 83 billion dollars a year that's a Bloomberg figure working often IMF report.

There are other reports that -- quantify sort of the same fine but I think we need higher capital standards as protection against failure.

Capital to be there instead of the tax Payer vs just some big tax what about.

Access to the Federal Reserve pipeline it used to be that find a -- -- a salute and financial institutions didn't have.

An open window to the Fed that was reserved for the commercial banks -- one said that held steady loans and and deposits.

That window was open during this to crisis through TARP that should that window be closed yes I think should not should be scaled back -- as well.

And we should get back to the tradition of having FDIC insurance for what it was intended for.

Which is to protecting deposits did Sherrod brown and do -- do other Democrats besides him agree with you -- that.

I'm not sure about that specific point but again I absolutely think there is growing bipartisan.

Consensus on these issues you see that in congress.

They also see an outside congress among regulators stand -- and Democrat.

And Thomas Hoenig FDIC use a conservative among commentators George well and and others on the Republican side as wells liberals.

Finally at the reason why I was warning Ben Bernanke we're together we're talking -- about about Federal Reserve policy that about.

Banking regulations what do you think about the Federal Reserve and its policies in terms of trying to.

To assuage the financial problems that we're -- now is it working or not.

Well in terms of there ultra free money our policy.

I think it's creating a lot more risk.

And it's benefiting the economy so I think that ratio.

Of benefit to risk Israel way out of -- whack -- fault that.

For quite awhile in terms of this too big to fail issue.

The Fed also has a lot of tools at its disposal -- itself under Dodd-Frank.

Could impose higher capital requirements than it has its chosen not to do not I think that's a mistake and several of us have to told Ben Bernanke about.

And finally we we got to wrap this up but Dodd-Frank itself it was meant to stop too big to fail clearly -- -- is going the opposite direction is Dodd-Frank a failure.

Yes in fact it's not -- too big to fails not only growing in spite of Dodd-Frank in many ways it's growing because of Dodd-Frank.

And one area where I would disagree with Elizabeth Warren is all that over regulation.

Including CF PB which she she strongly supported that is crushing smaller banks community banks vs the mega banks as well.

Senator David bitter Republican Louisiana good to see -- senator thanks -- -- appreciate it let's over do you.

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Can Future Bank Bailouts Be Avoided?

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