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Thursday, November 19, 2009

Bank bust-up bill will be DOA in US Senate: analysts

The full House of Representatives will likely pass Rep. Paul Kanjorski (D-Pa.)'s "Too Big to Fail" amendment, which allows regulators to break up big, complex, dangerous banks and other companies so they won't have to be bailed out.

But "we do not believe it would pass in the Senate, as finding 60 votes to support more aggressive Too Big to Fail - Systemic Risk legislation is unlikely," predict Scott Valentin and Paul Miller, bank analysts at Friedman Billings Ramsey's FBR Capital Markets in Richmond, in a report to clients.

Of course, "given the popularity of the issue," Kanjorski's amendment has already passed the House banking committee, where Kanjo is the #2 Democrat (after Barney Frank, D-Mass.), by a 38-29, D vs R vote.

And, in today's environment, a tough break-em-up law may gather conservative Republican support, say from Sen. Richard Shelby, R-Ala., who had the foresight to question (though he voted for -- corrected) the Gramm-Leach Act that repealed old limits on banks playing Wall Street.

But President Obama is likely to"apply pressure on lawmakers not to adopt aggressive legislation," instead backing  Sen. Christopher Dodd (D-Conn.)'s proposal, calling for "increasingly regulatory oversight," more capital, and "self-designed failure resolution plans." 

Got that? Self-designed. Because it's not in big companies' interest to self-destruct. Right, Mr. Greenspan?
Posted by Joseph N. DiStefano @ 3:33 PM  Permalink | Post a comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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