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What's hot on the hill today the question of will financial reform passed this is major legislation.
That affects all of our money in majority leader Harry Reid has called -- -- heat -- the -- On Monday on this package of new regulations for Wall Street Democrats are still looking at this hour for Republican support.
One initiative that will be on the table is to limit the size of banks in this country.
It comes from Oregon senator Jeff Berkeley he is a member of the Senate banking committee and joins us now senator thanks for your time this morning.
Hope that you didn't see your regular people explain this concept to -- if you will because on the face of that it sounds like you would be punishing.
Banks for succeeding if you're trying to keep them smaller than they naturally would grow.
Actually the provision on immersed in its proprietary trading provision which says that we need to keep the high risk investing.
Out of our lending depository banks as a key piece of reform at the end of the Great Depression.
That said -- -- banks need to be safe need to be able to keep lending to our families and small businesses during a downturn in the economy.
And we got away from that many of our basic banks now are doing a tremendous amount of revenue from high risk investing.
Taking the funds they raised from the Fed window and putting it into high risk side -- -- in the lending side.
And so -- we need to straighten that -- out and create that wall.
And senators our viewers understand added there's somebody -- that this is so complicated there's so many terms being tossed out.
Is this something akin to what's known as the -- -- rule named after Paul -- This is simple rule it's that basically a version of Glass-Steagall.
In which you say that there are functions that aren't compatible.
-- this didn't think of it it's it's basically like.
Taking fireworks fireworks in the cells are a good thing.
What you don't store them in your living room they accidentally set -- -- burn -- your house and that's the same with high risk investing not doing that.
Doesn't belong in our lending banks because those banks have access to special.
Taxpayer insured deposits as special winning lentils from the Fed -- -- get very inexpensive funds from the bad.
And that's to enable them to power -- our economy by supporting our small businesses and our families through loans.
Not for diverting that in the high risk investing.
-- acts like our president -- some of our research your name came up as a potential sponsor of a potential amendment that would talk about limiting sizes of banks going forward.
Are you up for that not for that where he stands -- -- this is that Sharon brown amendment.
An idea supported it establishes.
Caps font size -- that any one institution is not so large.
That when it goes down it takes a whole economy with it.
You think back to a long term capital management.
The firm was so sizable -- when it went down it created a major financial crisis so there are should be some reasonable limits.
On the degree this beat the size of our GDP that a single financial institutional.
You -- according to a couple reports there are some banks today that are operating -- JPMorgan that would fall that over this limit already that they would have to.
Scaled down their operations if this amendment were to pass I go back to my original question.
Are you not punishing these banks for succeeding why are you telling somebody that business that they -- that they can get -- bit.
I believe that the provision of -- Brown's bill -- that the banks currently exceed.
Is -- now -- proprietary.
Investing that they're doing.
And that -- -- these pieces together.
Because if you have any institution involved in very high risk trading.
That and -- those.
Are tied together with the other firms threw us swaps and other derivatives.
Then you have a very.
Messy situation now and -- messy ending when one firm goes down to starts a series of dominoes this web of risk.
And so while they keep the levels can be certainly he's made it.
Having either -- for additional capital requirements.
For those firms so that they take less risky positions that they get larger.
One of those approaches this is probably very what's happening.
I'm very quickly senate because we're gonna get -- run up against one of -- computerized breaks but you know the question has been raised.
Are we moving too fast on this the American people have more than a year to absorb a complicated build it involves health care reform.
This is by most accounts more complicated it's only been a couple of weeks' time your watching it being debated.
Well you know the that the banking committees have been working on this for well over a year in us steady series of hearings.
The main issues of men being hashed down.
So why hasn't been on the floor.
It definitely has been in process for over.
-- over -- -- -- it but it is I grant -- it it is complicated but it's incredibly important.
We have to be in that window where we get this done.
So that we get out of the risky situation we're now if you think about it there's more risk now because we have more.
Investment firms that were -- like Bear Stearns and Merrill Lynch.
Which are now part of our lending.
Banks have so we really -- -- the fireworks in the living room if you will and we have fewer and larger institutions and that in itself is a risky situations so.
We need to act before we have.
A second disaster and as we -- test vote set for Monday later in the day we'll continue to watch it if these negotiations with your opposing party.
Are under way senator Jeff partly thanks for your time.
You're welcome today.
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