Apparently Paul Kanjorski is set to release an amendment to the administration's/Frank's Resolution authority amendment. This one is going to be a doozy. This will empower the administration to break up any financial institution that they see that has any systemic risk.
In what is rather interesting, it also has garnered the interest and possible support of Richard Shelby of AL.
These powers are going to be truly sweeping: Break up the Banks
This power would essentially grant the federal government to break up any banks that they see as a possible threat to the Financial industry.
The powers Kanjorski is proposing are sweeping – he wants to hand the federal government a measuring stick to figure out which companies are a threat to the larger financial system, then give the feds the authority to break them up regardless of their financial health.
Kanjorski said during Tuesday’s House Financial Services Committee hearing that his provision would make it "so that nowhere in the world in the future will there be gigantic tsunamis coming out of nowhere and striking the entire world economy."
Kanjorski insisted in a later interview that he wasn’t out to get the financial industry, even though one New York Democrat warned that such wide ranging authority would signal the "death knell" for financial markets.
There are 15 or 20 firms, Kanjorski said, particularly in the financial industry, that are "so large that every body knows that we can’t allow them to fail." He declined to name names.
Of course, what you probably won't see is for the administration to openly endorse the proposal. No, it's not because opposition, you may see some support on this, the issue is that if this were openly endorsed it would signal a "death knell" on the markets.
Investors would lose money instantly and bank stocks would plummet tremendously. The interesting thing to note is that Frank is the administration's point person in the house and he's endorsing this measure basically.