We applaud the proposals Senators Brown and Vitter have put forward to increase capital for the largest Wall Street banks, appropriately limit the scope of the Federal safety net, and reform the structure of bank holding companies. These are important steps forward in financial reform that would do much to eliminate the subsidies to ‘too big to fail’ banks, and protect the public from the devastating costs of another financial crisis.

The Dodd-Frank Act was a vital advance in the effort to reform the financial system and protect consumers. But it left critical decisions to regulators, particularly as regards bank safety and soundness and reversing the moral hazard and financial sector consolidation created by government actions to assist Wall Street during the 2008-2009 crisis.

Regulatory actions in these areas have been slow and disappointing. New capital rules proposed under Basel III continue to allow our largest banks to be leveraged up to 33-1. Regulators have not even proposed rules to implement new safeguards on the use of Federal Reserve emergency financial assistance. And the increased concentration in the banking sector created by the numerous mergers and consolidations that occurred during the crisis continues in place.

The Senator’s proposals in these areas advance the financial reform debate and address these problems head on by creating clear, forceful protections against excessive borrowing at the largest Wall Street banks, placing strong statutory restrictions on Federal emergency assistance to non-depository institutions, and taking steps to simplify the excessive complexity of our global mega-banks.

We are, however, opposed to separate proposals in Section 6 of the legislation that would potentially limit the powers of bank supervisors to enforce rules and standards, reduce consumer regulatory protections, and prevent the collection of data important to expanding small business lending, as well as lending to women and minority owned businesses. Such proposals move in the opposite direction from the rest of the bill by reducing accountability and transparency, and weakening rules designed to help ensure capital flows to sustainable ‘real economy’ investment. They are mistaken policies, and they should not be a part of this bill.