Proposed amendment would grant government ability to break up firms

Rep. Ed Perlmutter (D-Colo.) late on Tuesday circulated a much-anticipated amendment to a financial bill that aims to give the government greater powers to regulate large financial firms.

In a roughly 70-word amendment, Perlmutter aims to give the government the ability to break up the different business units of large financial firms. Perlmutter and some Democrats have looked back for inspiration to the 1933 Glass-Steagall Act which firmly separated the commercial and investment divisions of banks.

Lawmakers effectively overturned that law in 1999.

Perlmutter's amendment will be considered this week by the House Financial Services Committee which is marking up legislation that aims to regulate the financial industry for "systemic risks" and give the government enhanced powers to regulate large, systemically-important firms. Perlmutter's amendment would give the Federal Reserve Board of Governors additional powers over financial holding companies.

Perlmutter's amendment reads:

Page 31, line 3, after "activities," insert the following: "to divest its commercial banking, investment banking, or other activities, so it shall not be affiliated in any manner with any corporation, business trust, or other similar organization engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of stock, bonds, debentures, other securities, insurance or derivatives transactions,".