Senate Banking Committee ranking member Michael Crapo, a Republican from Idaho, said setting capital standards for large banks should be a decision for regulators, not lawmakers.
“On the capital issue, clearly we need to have the correct and safe capital levels established,” Crapo said in an interview. “I think that’s a function that the regulators who have the expertise should achieve, should focus on. It certainly is not a political decision.”
Crapo’s comments put him at odds with the concept behind a bill by Senators Sherrod Brown, a Democrat from Ohio, and David Vitter, a Republican from Louisiana, that would set capital standards for the largest banks, in part to prevent banks from being perceived as too big to fail. Vitter and Brown say that the capital standards proposed by regulators are too low.
Crapo said he prefers to attack the too-big-to-fail perception with “an enhanced bankruptcy procedure rather than to pursue a government break up.” He said he has not read the Brown-Vitter bill.
A draft of the measure would require U.S. regulators to scrap international Basel III requirements and instead impose a higher capital standard: 10 percent for all banks and an additional surcharge of 5 percent for institutions with more than $400 billion in assets. The Senators plan to introduce their bill later this month.
“Most people would agree that we have too much concentration in the banking world at the top with regard to the big banks,” Crapo said. “The question is how do we approach resolving that issue.”