By Claes Bell
April 25, 2013
It appears that no one likes “too big to fail” too much these days.
After a year that has seen increasing support for radically reshaping the banking industry, a new bipartisan bill called the Terminating Bailouts for Taxpayer Fairness Act to put additional regulations on banks so large that they would threaten the global financial system was unveiled this week by Sens. David Vitter, R-La., and Scott Brown, D-Ohio…
So far, community banks have reacted positively to the bill. They have long been concerned about the potential impacts of Basel III, and Brown-Vitter would alleviate some of those concerns…
The question of Brown-Vitter’s effect on the financial system as a whole is also an open question, said Cornelius Hurley, a professor and director of the Boston University Center for Finance, Law and Policy, in an email.
“The numbers set in Brown-Vitter are completely arbitrary and their consequences are unpredictable,” Hurley said.
And while it’s likely Brown-Vitter would take megabanks down a peg, regulators would get a lot more discretion over capital requirements at small banks, and that might be problematic, Hurley said.
Read the full article at Bankrate.com.