I have been in Washington for 10 years as CEO of ICBA, and I have seen everything from the Wal-Mart bank charter fight to the financial crisis and Wall Street bailouts of 2007-09 and everything in between. I have seen some nasty battles inside the Beltway, and I’ve even engaged in a few myself.
But with the momentum building for legislation to take on the too-big-to-fail problem once and for all, I don’t think I’ve ever seen so many lobbyists in this town. In fact, there are more Wall Street lobbyists swarming Capitol Hill than there will be cicadas buzzing around the Washington metro area this summer. With the weather warming up, it’s almost as if the blue suits and power ties are sprouting right up out of the ground.
I, for one, can’t blame them. The Terminating Bailouts for Taxpayer Fairness Act (S. 798), introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), has reignited the debate over the too-big-to-fail problem. The bipartisan legislation would implement higher capital levels on large financial institutions to address their government guarantee against failure—one of our nation’s most outrageous distortions of the free market system.
To limit taxpayer vulnerabilities, protect against future crises and level the playing field for community banks, the TBTF Act would set capital standards based on an institution’s size and complexity. The bigger the bank, the greater its systemic risk, the higher its capital rate. It’s as simple as that. Additionally, the legislation includes a variety of regulatory relief measures for community banks. These much-needed reforms, which range from expanding mortgage-lending opportunities under new regulations to supporting greater accountability in bank exams, will help offset some of the red tape that has bound Main Street because of the misdeeds on Wall Street.
But let’s not forget, the TBTF Act isn’t the only game in town. Several other members of Congress, from House Financial Services Monetary Policy Subcommittee Chairman John Campbell (R-Calif.) on the right to Sen. Bernie Sanders (I-Vt.) on the left, have introduced separate bills to take on the too-big-to-fail problem. Regulators such as FDIC Vice Chairman Thomas Hoenig and Federal Reserve Bank of Dallas President and CEO Richard Fisher have introduced their own plans, while newsmakers such as MIT economist Simon Johnson have identified too-big-to-fail as one of our nation’s greatest threats.
So with ICBA, community bankers, regulators, members of Congress, economists, consumer advocates and the American public supporting new measures to deal with the too-big-to-fail risk to our financial and economic system, there’s no wonder why Wall Street lobbyists are out in full force.
Like the cicadas that burrow out of the ground every 17 years, the lobbyists are beginning to swarm as Washington heats up. The problem is that the lobbyists are louder and make an even bigger mess. So I encourage community bankers everywhere to make sure their voices are heard in Washington so Congress will not let the Wall Street hired guns once again maintain the too-big-to-fail status quo. With so much at stake, it’s time for Main Street to grab the flyswatters.
Are you ready to join us?