Less than a decade after Wall Street gambling destroyed the global economy and set working families back a generation or more, a bipartisan group of wealthy senators is now ready to let dozens of “Too big to fail” banks avoid one of the cornerstone regulations put in place by Congress in response to the crisis.
Banking companies worth up to a quarter-trillion dollars would escape the most stringent new systemic-risk regulations from the 2010 Wall Street regulation bill under a deal struck by Senate Banking Committee members late Monday.
Currently, any bank that holds $50 billion or more in assets must prove to Federal Reserve staffers that it has a safe and effective plan for unwinding its assets should the company fail. These so-called “Living wills” have frustrated bankers. Monday night’s bargain between Chairman Mike Crapo, Sen. Angus King, and eight Democrats on the committee would free 26 of the 38 banks currently subject to the Fed’s extra oversight.
For years, banking lobbyists have wanted looser rules for “Systemically important financial institutions,” or SIFIs in Dodd-Frank parlance.