Congressman John D. Dingell (D-MI15) today introduced the Financial Services Industry Stability Act of 2010 to improve the Federal government's capacity to oversee the financial services industry, as well as ensure none of its members become so large as to pose a systemic risk to the U.S. economy.
"This legislation is a necessary step in ensuring all parts of the Executive branch pay adequate attention to the systemic health of the U.S. economy," said Dingell. "Moreover, this Act will accord the power to the Federal Reserve, in coordination with all other Executive branch organizations, to assess a systemic risk and cause financial institutions deemed too large to fail to restructure."
The Financial Services Industry Stability Act of 2010 is modeled on section 7(a) of the Endangered Species Act, which requires all Federal agencies to cooperate in carrying out the Act. This legislation mandates cooperation and coordination by the entire Executive branch in protecting the health of the U.S. economy without the need to create a new, unitary agency. Moreover, the Financial Services Industry Stability Act of 2010 empowers the Federal Reserve and all other organizations within the Executive branch to break up financial institutions they deem to large to fail, as well as impose increased capital reserve requirements on those institutions ordered to restructure. Lastly, any restructurings ordered under this Act would be paid for by the financial services industry from a fund comprised of levies on individual members of the industry.
"In 2008, around a dozen banks were big enough, powerful enough, arrogant enough and greedy enough to nearly send our nation into a depression -- and we would have taken the rest of the world down with us too," Dingell said. "Amazingly, more than a year after these superbanks nearly bankrupt our country, they continue to be very big, very powerful, very arrogant and very greedy. Nothing has changed from this time 15 months ago, including the banks' desire to make big bets that produce even bigger bonuses for executives. We need to send a clear message to our banks and the executives who run them this behavior has to change.
"As my friend Alan Greenspan once said: "If they're too big to fail, they're too big.'"