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The Best Solution to Vampire Squid? Calamari
The financial services reform bill will be debated in the Senate next week. The great test for the bill will be what it does to rein in Goldman Sachs, the Wall Street institution famously described by Rolling Stone journalist Matt Taibbi as “a vampire squid jamming its blood funnel into anything that smells like money.”
The bill is being taken up just a week after the Securities and Exchange Commission issued civil fraud charges against Goldman for creating mortgage-backed investment vehicles deliberately designed to fail in order to benefit preferred clients. Everyone knows it’s tough to handcuff a squid. So some are advocating for a simpler solution.
Today, Senators Sherrod Brown and Ted Kaufman proposed a tasty dish of calamari. They unveiled the “Safe Banking Act of 2010” a commonsense measure to cap the size of the biggest banks as the single best way to prevent future taxpayer bailouts. Their bill will be offered as an amendment in the Senate and will result in the break up of the largest “too big to fail” institutions.
“We can either limit the size and leverage of 'too big to fail' financial institutions now, or we will suffer the economic consequences of their potential failure later," said Kaufman. “Breaking apart too-big-to-fail banks is the necessary first step in preventing another cycle of boom-bust-and-bailout.” Read more.