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Senate to vote on breaking up the banks and auditing the Fed

Most people tend to think that the question with an amendment is whether it'll get 60 votes. But often the question is whether it'll be allowed to come up for a vote. This is particularly true for popular amendments that are opposed by powerful industries (like the banks) and powerful players (like the White House). In those cases, the safest way to kill the thing isn't to vote it down, but to keep it from being voted on at all.

That seemed like the likely fate for some of the most controversial amendments in the financial regulation bill. In particular, the Brown-Kaufman plan to break up the banks and the Sanders amendment to audit the Fed both looked like the sort of bills that could get killed in a backroom somewhere so that senators didn't actually have to take a stand on them. But according to Harry Reid, both are going to come up for a vote.

By Ezra Klein  |  May 6, 2010; 4:01 PM ET
 
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Comments

According to the WSJ, the President wants too-big-to-fail legislation to focus on risk, not size.
http://online.wsj.com/article/BT-CO-20100506-715282.html?mod=WSJ_latestheadlines

I rather expect Senator Reid will hear from the President on this and the Senate Majority Leader will modify his statements to the press.

Posted by: MsJS | May 6, 2010 4:17 PM | Report abuse

Is this the same proposal that lets banks exist with insured deposits + wholesale funding worth 12% of GDP, or $1.7 trillion? Also, will banks be allowed to fund with uninsured deposits? I don't believe those were directly addressed although maybe that's handled elsewhere.

Posted by: justin84 | May 6, 2010 4:34 PM | Report abuse

Another example of the most open and transparent administration in history. Hoo-boy.

Posted by: AkCoyote | May 6, 2010 4:39 PM | Report abuse

I hope that BOTH come up for a vote.

Posted by: maritza1 | May 6, 2010 5:09 PM | Report abuse

The reason Obama and the Fed are behind this audit the fed bill is that it is not the Ron Paul "audit the fed bill that passed the Senate. It is the same watered down bill that they tried to pass last year but people caught on to. Even worse it limited it to one partial audit. This bill has no disclosure of the Fed. That is why they are trying to pass it so fast before anyone finds out the truth.
tell your friends, call your Senators while there is still time. The author should have done his homework.

Posted by: rick75 | May 7, 2010 12:50 AM | Report abuse

Under Health Care Reform, If you do not have medical insurance you can be penalized, but now you can easily find health insurance for your family under $40 http://ow.ly/1AqF1

Posted by: abelcardo6 | May 7, 2010 7:19 AM | Report abuse

Citibank must go away. (They should have gone away 28 years ago, when we started down the path of moral hazard.)

So far, the path has been to create bigger banks. (Letting Merrill and Countrywide disappear into BoA, etc.) By portfolio theory, this should reduce risk. In reality, the bigger entity still runs on the knife edge of risk where a drop in part of the portfolio causes a margin call across the whole enterprise and sucks up the liquidity they need to operate.

Theoretically, the Obama approach could work, but it's much too hard to measure the small probability risks. There is no empirical data to use to measure things that haven't happened before. If we just let these things fail, evolution will give us a more stable environment. It is government intervention, Republican and Democrat, that has allowed our current set of fragile entities to survive.

Posted by: staticvars | May 7, 2010 10:10 AM | Report abuse

Benedict Sanders sold out the audit and essentially accepted the white wash language Ron Paul and Grayson fought off in the house. We have to contact our SEnators and DEMAND they return to the language passed in the House on this point or refuse to vote to end discussion on the bill, so it can't be brought to a vote:

" Bernie Sanders has sold out and has sided with Chris Dodd to gut Audit the Fed in the Senate. His "compromise" is what the Administration and banking interests want - they'll allow the TARP and TALF to be audited, but no transparency of monetary policy decisions,discount window operations or agreement with foreign central banks. We need to take aciton and stop this!

http://www.facebook.com/r...

The amendment limits the audit only to emergency lending, the GAO would be barred from looking at the Fed's foreign central bank swaps and its purchasing of mortgage debt from Fannie Mae and Freddie Mac, which is considered part of open market operations and not emergency lending. "

Posted by: sailingaway1 | May 7, 2010 10:28 AM | Report abuse

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