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Department of Defense Appropriations Act - Continued

Floor Speech

Location: Washington, DC


Mr. VITTER. Mr. President, as we continue to face enormous economic challenges and uncertainty, I rise to join with others in continuing to express concern about too-big-to-fail--a policy we saw clearly in large measure coming out of the 2008 crisis and a policy many of us think continues to this day and puts the American taxpayer and the American economy at great risk.

This isn't a Republican concern or a Democratic concern; it is not just a conservative concern or a liberal concern. A lot of us on both sides of the aisle have this concern. A good example is a Democratic colleague I have been working closely with on these ideas--Senator Sherrod Brown of Ohio. We both serve on the Banking Committee. We disagree on a lot of issues outside and within the Banking Committee's jurisdiction, but we agree on some things too, including real concern about too-big-to-fail institutions and the continuation of the implicit policy of too-big-to-fail. That is why he and I have come together on a number of fronts related thereto, including legislation we can pass this week before we end this Congress that would simply authorize a study. It is an important GAO study about too-big-to-fail and those institutions.

The idea is very simple. We would ask the GAO--a clearly nonpartisan, clearly expert entity with a lot of smarts, with a lot of ability to do valid, unbiased research--to study whether there is an implicit policy of too-big-to-fail with regard to our largest financial institutions and, if so, what benefits that implicit taxpayer guarantee gives those institutions.

Specifically, it would look at bank holding companies with $500 billion or more of consolidated assets, and it would look specifically at three things, among others: first, the favorable pricing of the debt of those institutions resulting from the perception that those institutions would again be bailed out during times of financial stress as they were during 2008; second, any favorable funding or economic treatment they received from increased credit ratings directly resulting from perceived government support; and third, the favorable economic benefit of the 2008 bailouts and existing safety nets of the Federal Reserve and FDIC. I think these questions are very legitimate, and having an unbiased, academic look at that would be very helpful in terms of our continuing work on these issues.

We talk about this and debate this all the time. Wouldn't it be useful to have an unbiased, apolitical, expert source look at these questions: Do these big institutions with $500 billion or more in consolidated assets--are they considered too-big-to-fail by the market, and does that perception give them advantages, such as favorable pricing of debt, such as favorable funding or economic treatment from their increased credit ratings, et cetera?

There is a lot at stake. It would be very helpful to have factual, unbiased answers to these questions.

First of all, there is a whole question of too-big-to-fail continuing to exist, and I believe it does. This would put nonpartisan eyes on the question and give us a good sense of, do we have more work to do if, in fact, we want to get rid of too-big-to-fail, which we, virtually to a person in this Chamber, profess we want to get rid of. Secondly, to the extent too-big-to-fail continues as a policy and/or a perception, is it giving advantages to these institutions, market advantages, market distortions--which, by the way, if they are the winners, there also by definition have to be losers, which are the smaller institutions that are at a competitive disadvantage because of these market distortions, because of these advantages that too-big-to-fail gives these mega-institutions.

So I hope this is pretty much a no-brainer. It is a study. It doesn't mandate any actions, and it asks valid questions to which getting unbiased answers would be very helpful in our continuing work. That is why Senator Sherrod Brown and I have come together in a bipartisan way to ask these questions. We have developed legislation mandating this GAO study, and we are trying to get what we consider to be very noncontroversial legislation passed before the end of the year.

As it stands now, we have cleared this legislation on the Republican side. Every Republican Member is perfectly willing to let this pass by unanimous consent. That process has just begun on the Democratic side. I urge all of my colleagues to follow the lead of Sherrod Brown to allow us to ask and get unbiased answers to these very legitimate questions. I urge everyone on that side to clear it themselves, to join us on our side in clearing it so we can pass it through the Senate and get this passed in the House, hopefully on the consent calendar, which we are already working on. That clearing process will take a little bit of time, but I look forward to coming back and having it cleared by UC. I will probably ask for a live UC at some appropriate point tonight or tomorrow when everyone has clearly had a chance to look at the study legislation.

I look forward to our coming together, I think in a very sound way, asking these legitimate questions, asking a nonpolitical expert entity to give us valid answers to these questions so we can move forward with the proper policymaking.

Thank you, Mr. President. I yield the floor. I suggest the absence of a quorum.


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