WASHINGTON (April 28, 2010)—As an original co-sponsor, Congressman Chandler joined Reps. Brad Miller, Ellison, and Cohen in introducing the Safe Accountable, Fair and Efficient (SAFE) Banking Act of 2010, shrinking massive Wall Street banks to a safer, more manageable size. The bill will not affect small banks, but will affect the six extremely large financial institutions which currently have total assets estimated to be in excess of 63% of U.S. gross domestic product (GDP): Morgan Stanley, Goldman Sachs, Wells Fargo, Citigroup, JPMorgan Chase, and Bank of America.

“Six institutions controlling assets the size of over 60% of our nation’s GDP is unacceptable and dangerous,” Congressman Chandler said. “We have already seen what happens when ‘too big to fail’ banks dominate our financial system—the crash of September 2008 and the Wall Street bailout, which I opposed.  This bill will prevent that from happening again by breaking up these huge banks, protecting our local banks, and keeping the American people from funding additional bailouts with their tax dollars.”

With the amount of concentration of wealth and financial power in these six institutions, the instability of these companies could potentially again threaten global financial stability. The SAFE Banking Act will seek to prevent instability in these institutions by placing restrictions on the amount of capital and risk these institutions can manage.

The bill will limit the size of these massive financial institutions by setting caps on deposits, non-depository liabilities, and leverage.  Specifically, the SAFE Banking Act creates a 6% equity minimum for bank holding companies and certain non-bank financial institutions, imposes a strict 10% cap on any bank holding company’s share of the United States’ total insured deposits, and reduces the maximum amount of non-deposit liabilities at financial institutions (2% of U.S. GDP for banks and 3% of GDP for non-banks).

“As Congress continues to debate a legislative solution for our financial mess, I am proud to support a bill that takes major steps to break up supersized institutions while protecting our small, responsible Kentucky community banks,” Chandler continued. “This economic crisis has put a huge burden on small businesses, small banks, and Kentucky families, and I will continue to do all I can in Congress to help make sure this crisis never happens again.”
 

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