Banks too big to fail are ‘inherent problem,’ Tester says
Senator questions oversight of bailout money, calls for ‘common sense regulation’
(WASHINGTON, D.C.) – During a Capitol Hill hearing, Senator Jon Tester today grilled a panel of expert witnesses about an issue he says concerns many Montanans: How do we regulate financial institutions that are considered “too big to fail?”
Although they play a major role in the health of the U.S. economy, many of the nation’s largest investment banks have collapsed or are near collapse. Tester called the situation “an inherent problem.”
Last fall President Bush signed into law the $700 billion Wall Street bailout, formally known as the Troubled Asset Relief Program (TARP). Since then, numerous reports have emerged about misuse of the money.
Tester was the only Senate Democrat to vote against both the Wall Street bailout and the bailout of the U.S. automotive industry. He said he wasn’t convinced either bailout would work.
During today’s hearing, Tester heard input on how to improve regulation to prevent future misuse of bailout money and to restore faith in the system.
Panelist Robert Litan of the Brookings Institute told Tester the public currently has “no confidence in the regulatory system”—especially after prosecutors charged businessman Bernie Madoff with investor fraud last year. Madoff is accused of bilking millions from investors across the country, including several in Montana.
“I’ll just tell you I hear the same exact thing and I, quite frankly, am just as frustrated and just as furious as (the public),” Tester said. “Whether you’re talking about Madoff or talking about how some of those TARP funds were used. I think they will be fixed. I think it’s just a matter of time of getting some common sense regulation.”
During today’s hearing, panelists proposed several ideas for improving regulation. One panelist suggested the government no longer identify which financial institutions are “too big to fail.”
Tester today praised the hundreds of community banks based in Montana. Not one of them has recently failed or has accepted funding from the Wall Street bailout.