Senator Brown ’s New Bill Will Help Big Banks

Norbert MichelSenator Sherrod Brown (D-OH) hasjust introduced the“Close the Shadow Banking Loophole Act,” a bill he claims will prevent “Big Tech and commercial companies” from operating banks “without proper oversight.” While the title–and the reasoning–might sound ominous, this bill does virtually nothing to ensure the safety and soundness of th e banking sector. (Theshadow banking theme is flawed too, but let ’s leave that aside for now.)It ’s also strange that Senator Brown, someoneknown to stick up for the little guy, is behind a bill that undoubtedly protects large financial institutions from competition. Back in 2020, the Bank Policy Institute (BPI), the lobbying organization for some of the United States ’ largest banks, released a report calling for the same thing. (BPI usednearly identical language.)So, while Brown ’s bill is new, this issue is not.According to Brown –and BPI and other bank lobbyists–the issue is that anyone engaged in the same banking activity should be regulated in the same manner. The banks–and Brown–say that they do not wantindustrial loan companies(ILCs) to “get away” with being less regulated than “regular” commercial banks. While that premise seems fair, it’s more of a technical problem than anything else, and it only exists because the U.S. regulatory framework is a total mess.The issue really amounts to a complaint that theparent companies ofnonbanks (such as ILCs) will not be regulated by the Feder...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs