January 15, 2013
CBAI applauds the decision by the Government Accountability Office to study the economic benefits received by the “too-big-to-fail” megabanks as a result of actual or implied government bailouts. In the waning days of the 112th Congress U.S. Senators David Vitter (R-LA) and Sherrod Brown (D-OH) introduced legislation requiring the GAO to conduct this study (Vitter-Brown GAO Study on Government Subsidies of Megabanks). While this bill passed the Senate by unanimous consent it was not taken up in the Republican-controlled House. In January Senators Vitter and Brown wrote the GAO to encourage this study, and last week the GAO announced they will conduct a study. READ LETTER In the letter to GAO Comptroller General Dorado the Senators said the government has not done enough to prevent future bailouts. “There is broad bipartisan support for the position that we must end “too-big-to-fail” government policies, whereby the U.S. government provided financial support to large financial institutions to protect them from failures of their own making.” “We should all want free-market principles to apply across the financial system and do everything possible to ferret out any market distortions fostered by government involvement and subsidies to the largest megabanks.” In a separate statement the Senators said, “After the financial crisis of 2008, policymakers should seek all available data to unwind too-big-to-fail market distortions.” CBAI thanked Senators Vitter and Brown and also the GAO. We look forward to the results of this important study and vigorously support legislation to downsize "too-big-to-fail" banks.