Sen. Sherrod Brown, co-sponsor of a bill to prevent any one financial institution from growing so large that it could jeopardize the economy or require another federal bailout, sees little likelihood of anything passing this year — not his plan, not Republican plans to dissolve Fannie Mae and Freddie Mac and not his own committee’s bill to overhaul them.
That’s too bad, the Ohio Democrat says of his proposal — because too much wealth is accumulating in too few hands.
“It really doesn’t matter what I think — it matters what the markets think,” Brown said at a Bloomberg Government breakfast in the Washington Bureau today. “It’s clear the markets think `too big too fail’ still exists.”
Brown cites numbers behind the concern embodied in the bill that he and Sen. David Vitter of Louisiana have sponsored: The top-six banks whose assets once equaled 20 percent of gross domestic product now hold assets equal to 65 percent of GDP. The top-two banks hold 45 percent of the nation’s home mortgages.
He also cites politics: Republicans clamoring to close the “government-sponsored enterprises” have been reading the editorials of the Wall Street Journal too long, he says — they blame the 2008 financial crisis on the GSEs. The nation’s housing market, he says, requires a “government backstop.”
“I just don’t think there’s much chance at all of this happening,” he says of legislation on the front where he works as a member of the Senate Banking, Housing and Urban Affairs Committee. He chairs the Subcommittee on Financial Institutions and Consumer Protection.
The committee expects to start marking up the GSE overhaul legislation promoted by Chairman Tim Johnson, a South Dakota Democrat, and ranking member Mike Crapo, an Idaho Republican, on April 29.
Ye t the Senate isn’t likely to move on it, he says, and then there is the House: Speaker “Boehner wakes up every day and he’s got to decide, is he speaker of the House of Representatives, or is he speaker of the Tea Party?”’ Brown says of his fellow Ohioan, albeit a Republican. “When he’s speaker of the Tea Party, nothing happens.”
Brown speaks of the debate over income inequality in real terms — the guy making $12 an hour is never going to be able to save for his retirement, he says, and the 50-year-old making $40,000 a year who has $53,000 in his 401K suffers from something called “optimism bias.” He thinks he has a lot of money, but when it comes to retirement that’s “nothing.”
This is a senator prone to metaphors, like his mention of Timothy Crouse’s classic 1973 book about political campaign coverage, “Boys on the Bus.” ( His wife, Connie Schultz, is a Pulitzer Prize-winning veteran of the Cleveland Plain Dealer and writes features for Parade magazine .) “One bird flies off the wire, they all do,” he says of the “automatons” who write about the banking problem in the op-ed pages of the Journal.
The senator who circulated a letter signed by many of his Senate colleagues in support of President Barack Obama’s appointment of Janet Yellen as chair of the Federal Reserve, says she brings a “humility” and “demeanor” to the job that will serve her well.
“She takes the dual mandate seriously,” he says of the Fed’s mission of supporting employment while containing inflation. “She’s tuned in to the real economy…. People are going to trust her… because of that humility.”
He also says this of the sanctions that the Russian government slapped on some of his colleagues after the U.S. government put sanctions on Russians following the nation’s incursion in Crimea:
“We were all jealous — how do you get on that list?”