Posted on 11/13/2009 1:01:32 PM PST by Born Conservative
U.S. Rep. Paul E. Kanjorski has Wall Street in a tizzy.
Mr. Kanjorski, who is chairman of a key House Financial Services subcommittee, is proposing to let the federal government break up large financial institutions if they get so big their demise could threaten the nation's financial system.
Mr. Kanjorski, D-11, Nanticoke, wants the government to have that power even if institutions are financially healthy. He plans to introduce legislation next week outlining his plans for new regulation of financial industry firms deemed "too big to fail" because failure could damage the nation's economy.
Congress is considering a major overhaul of the regulation of the nation's financial institutions a year after the massive federal bailout of large, troubled Wall Street financial firms.
Some firms have grown so large they exceed the power of governments to control them, said Mr. Kanjorski, the chairman of the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
"I'm convinced that if we really don't want this to happen again, or have a small likelihood that it happens again, we have to find a way to lessen the powers of these gigantic corporations," he said. "If you don't, they're almost at the point now, they're going to be able to tell any government on Earth to go to hell."
Mr. Kanjorski said the legislation will be proposed as an amendment to a bill on limiting systemic risk by Rep. Barney Frank, D-Mass., the Financial Services Committee chairman. Mr. Kanjorski expects action by the end of the year.
"Rather than having them (large firms) become that big and bring the whole system to heel, we could move in and prevent that. And if we do, then the whole capitalist system becomes more competitive because now the little ones and the middle ones have the ability to compete," he said.
Mr. Frank told the Web site Politico.com he supports granting the government power to break up firms on a case-by-case basis.
Mr. Kanjorski estimated 15 to 20 firms are so large their failure could damage the economy. He declined to name them.
"If you're going to do this, you have to be fair, so you have to establish some objective standards," he said.
Mr. Kanjorski said the legislation will include a process for institutions to challenge their breakup.
"We're dealing with the taking and seizure of property here," he said. "You're talking about the exercise of extraordinary powers."
Mr. Kanjorski said he started to believe this was a good idea after meeting in September with regulators and legislators of the European Union, who are considering similar regulation.
Wall Street reacted with alarm.
In a statement to Politico.com, one financial services leader defended the large institutions.
"Large, diversified financial institutions provide unique and very significant economic value, for several reasons. Because of their size, diverse array of products and services and geographic reach, they are able to serve the needs of large globally active firms in a way that smaller, local banks simply can't," said Rob Nichols, president of the Financial Services Forum, a group of some of the world's biggest firms, including Goldman Sachs, Citigroup and JPMorganChase.
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Rep. Kanjorski: $550 Billion Disappeared in "Electronic Run On the Banks"
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Kanjorski: $2 Trillion really isn’t a lot of money
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Kanjorski Threads on Free Republic
The federal gov should be broken up for the same reason.
Ping
I can't for the life of me find where in Article 1, Section 8 Congress is given the enumerated power to 'control' any business.
Maybe Representative Kanjorski can find it for me.
L
However strongly I may feel about government having no right to intervene in businesses this way, in this case I'll let Wall Street and these major corporations defend themselves as they seem to be a lot better at defending their financial interests than we non-corporate taxpayers are in defending our own financial interests.
Mr. Kanjorski is the same Representative who a little over a year ago was pushing for the creation of a “reasonable profits board” to review all companies and determine if they make too much money, and if they do, take it away from them.
To big to fail is too big to exist. No more bailouts, let them fail.
This idea is like term limits. Unconstitutional but quite possibly likely to promote freedom. of course if Demoncrats design it, it will have the opposite of the intended effect.
May I ask the array of products and services that Goldman Sachs provide, outside of raping the American taxpayer?"
I'll bet Mr. Nichols wardrobe is heavily lined with Kevlar. Too bad it won't do him any good if he's hit with a head shot.
I'd like to suggest two small restrictions on financial institutions:
1. Increasing capital requirements to a minimum of 15%. The 40-1 leverage employed by trading firms defies common sense. IIRC, Dubya's administration allowed that to happen.
2. Depositors' funds must be segregated from other assets when calculating capital ratios. IMO, depositors' funds are simultaneously assets and liabilities.
In the short term, lending would freeze up, but it's not like they're lending that much now.
Let me know how he does with that.
The "interstate commerce" clause has routinely been the all purpose clause politicians use to do whatever they want, when they want, how they want. Pelosi has even used it to justify the healthcare bill.
Article I, Section 8, Clause 3: “ [The Congress shall have power] To regulate commerce with foreign nations, and among the several states, and with the Indian tribes; ”
Add that to the "Necessary and Proper Clause", Article One of the United States Constitution, section 8, clause 18:
: “ The Congress shall have Power - To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof. ”
Based on these clauses, Congress feels that it has the right to regulate every dollar spent by everyone if it crosses State lines, and regulate every business whose products cross State lines.
Stretching the interpretation of the Constituion this far, Congress can justify a complete dictatorship with the only legal out being the rights of the States to ceceed.
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