Brown, Vitter Urge Regulators to Implement Higher Leverage Ratios, Address "Too Big to Fail' Policies

Press Release

U.S. Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) are pressing federal regulators from the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) to take immediate action to implement their Supplemental Leverage Ratio for banks with more than $750 billion in assets.

"It's time that regulators take action to implement higher leverage standards. It's been more than six months since federal regulators announced a plan to increases leverage ratios for banks and today, our financial system is no safer from the threat of a megabank failure," Brown said. "These agencies owe it to American taxpayers to ensure their hard-earned money does not serve as the backstop for risky practices by Wall Street institutions."

"I want to know why the regulators are backtracking from any progress they would have made to end too big to fail," Vitter said. "What I'm hearing from the regulators is that they're unwilling to lead by example. Instead they want to follow the example of European bank regulators, and that will lead to a race to the bottom, only expediting and exacerbating the next financial crisis. Regulators need to take a meaningful step forward and push for a strong increased leverage ratio, because if they don't, the Wall Street megabanks will continue to profit off of the American taxpayers."

Thursday's hearing follows continued calls by Brown and Vitter to address the implementation of increased leverage ratios in the U.S. financial system. In January, Brown and Vitter called on regulators to strengthen proposed supplementary leverage ratios following the announcement by the Basel Committee on Banking Supervision reducing international leverage standards. Brown and Vitter remain dogged that increased standards are a critical component to reducing the threat of "too big to fail' megabanks and their impact on the U.S. financial system.
The Terminating Bailouts for Taxpayer Fairness Act (TBTF Act), or Brown-Vitter, would ensure that financial institutions have adequate capital to protect against losses. Specifically, the TBTF Act would:

Set reasonable capital standards that would vary depending on the size and complexity of the institution. Economic and financial experts agree that adequate capital is critical to financial stability, reducing the likelihood that an institution will fail and lowering the costs to the rest of the financial system and the economy if it does.

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