In an unanimous vote last week, the Senate approved a measure introduced by Sens. David Vitter (R-La.) and Scott Brown (D-Ohio) that would eliminate subsidies and funding advantages for Wall Street firms deemed “too big to fail.”
“There are at least three independent studies recently that underscore that ‘Too Big to Fail’ is still alive and well,” Vitter said, according to The Hill. “’Too Big to Fail’ policies are creating an unfair playing field for smaller banks.”
Brown and Vitter said that “too big to fail” banks have an advantage over smaller banks in that they are able to borrow more money because lenders expect a government bailout if the institution should fail.
The measure, which was presented as an amendment to the budget bill in front of the Senate, would apply to Wall Street banks with more than $500 billion in total assets, encompassing six of America’s largest financial institutions, The Washington Post reports.
Another measure introduced by Sen. Tim Johnson (D-S.D.) that restricts government funding by Fannie Mae and Freddie Mac also recently passed through the Senate. While some analysts have expressed doubt that the Senate would follow through on measures intended to end “too big to fail,” other industry participants see the passage of the measures as an indication of progress.
“The fact that both measures easily passed suggests there could be support for them as amendments to other bills,” the Guggenheim Washington Research Group said, according to The Washington Post.