On February 3, 2011, Sen. Sherrod Brown (D) was named as chairman of the financial institutions subcommittee of the Senate Committee on Banking, Housing and Urban Affairs. If approved, this will put Brown in an influential spot as the banking industry asks to ease demands imposed by last year's Dodd-Frank financial reforms, which he supported.
Brown has expressed some fairly strong opinions about problems he perceives in the banking industry. Last year, Brown repeatedly criticized the notion that the nation’s largest banks were too big to fail. He said that banks “overpay their executives.” He said the nation’s six biggest banks were “way, way too big and have too much power.” He said banks “game the system.” And those were just his remarks from one MSNBC appearance.
Congress passed its legislation to toughen capital and lending requirements. Brown indicated he would have preferred an even stronger bill, one that would break up the very largest banks because, he said, they controlled too much of the nation's financial power. The largest banks were at the heart of his criticism, adding that he was not blaming smaller institutions or Ohio's community banks.
“Sen. Brown has had tough words for the six largest mega-banks in our country -- which control more than 60 percent of our nation's wealth and whose risky practices contributed to the economic decline,” Brown spokeswoman Meghan Dubyak said. “But he's been a strong partner to Ohio's regional and community banks, credit unions, and insurance companies in efforts that promote economic development. He has worked alongside many of them to write provisions that help more community banks and credit unions unfreeze the credit market for small businesses.”
Bankers and other financial institutions at all levels nevertheless say the reforms were passed hastily and affected their ability to loan money and hold down customer fees. Their legislative agenda now calls for fixing what they can, including getting more leeway to trade derivatives, which enables large banks to hedge risk, and clarifying the definition of a “safe mortgage” --a term that affects how a mortgage is sold to a third-party investor and, therefore, whether a homeowner gets a mortgage. Banks also want more generous limits on fees they charge stores that accept debit cards, saying the imposition of lower fees will make it harder for community banks to compete against industry giants.
Formal approval of Brown’s appointment is expected by the full committee later this week.