The Brown–Kaufman amendment (or the SAFE Banking Act) was a failed 2010 amendment proposed in the

United States Senate The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States. The composition and pow ...

to be part of the Dodd–Frank bill by Democratic Senators

Sherrod Brown Sherrod Campbell Brown (; born November 9, 1952) is an American politician serving as the senior United States senator from Ohio, a seat which he has held since 2007. A member of the Democratic Party, he was the U.S. representative for Ohio's ...

(OH) and

Ted Kaufman Edward Emmett Kaufman (born March 15, 1939) is a retired American politician and businessman who served as a United States senator from Delaware from 2009 to 2010. He chaired the Congressional Oversight Panel for the Oversight of the Troubled As ...

(DE). It sought to address the

moral hazard In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk ...

too big to fail "Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...

by breaking up the largest banks with limits on the size of financial institutions. ''

The Christian Science Monitor ''The Christian Science Monitor'' (''CSM''), commonly known as ''The Monitor'', is a nonprofit news organization that publishes daily articles in electronic format as well as a weekly print edition. It was founded in 1908 as a daily newspaper ...

'' said the amendment was based on the idea that "too big to fail is too big to exist." ''

The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...

'' called it a liberal initiative with pure "populist appeal". The proposal failed on the Senate floor by a vote of 61 to 33 on May 6, 2010. Economist Simon Johnson emphasized that only a handful of Republicans voted for the bill and that the Obama administration opposed the amendment. After the vote, ''

The American Prospect ''The American Prospect'' is a daily online and bimonthly print American political and public policy magazine dedicated to American modern liberalism and progressivism. Based in Washington, D.C., ''The American Prospect'' says it "is devoted t ...

'' said the 33 "Yea" votes represented a "fascinating coalition – liberals and conservatives, Democratic leadership and three Republican conservatives." ''The New York Times'' said the amendment was strongly opposed by Wall Street; supporters included ''The New York Times editorial page, the editorial board of ''The Christian Science Monitor'', and Simon Johnson. To ''The Christian Science Monitor'', former

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

chairman

Alan Greenspan Alan Greenspan (born March 6, 1926) is an American economist who served as the 13th chairman of the Federal Reserve from 1987 to 2006. He works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. ...

hinted at support for the idea behind the amendment with his statement that "If they’re too big to fail, they're too big." Related legislation was passed in the Bank Holding Act of 1970, which gave regulatory powers to the

to cap bank sizes, but it was weakly enforced. A previous (1994) law limited a bank's total deposits to less than 10% of the nation's total, but waivers were issued to

JPMorgan Chase JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...

Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...

, and

Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...

. The amendment would have capped deposits and other liabilities and restricted bank assets to 10% of US

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

. At the time of the Senate vote, three banks, JPMorgan Chase, Wells Fargo, and Bank of America, exceeded that proposed amount. Any one bank's non-deposit liabilities would have been capped at 2% of GDP and for non-bank financial firms, the amount would have been 3%.

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Senate vote
Proposed legislation of the 111th United States Congress Sherrod Brown {{econ-policy-stub

See also

References

External links