By Silla Brush - 11/18/09 02:11 PM EST
Rep. Paul Kanjorski (D-Pa.) on Wednesday unveiled a highly anticipated amendment to financial overhaul legislation that would grant the government new powers to break up large financial firms.
Kanjorski's amendment goes much further than the Obama administration had originally proposed in its plan to give federal regulators, particularly the Federal Reserve, greater authority over large firms.
The amendment will be considered by the House Financial Services Committee this week. The financial lobby for big banks and large financial institutions pushed back strongly against the amendment while it was still being drafted.
“No firm should be considered to be ‘too big to fail.’ Financial firms that want to play in a casino need to have their own resources to cover their bets and not assume that tax dollars are available in reserve if their bets fail,” Kanjorski said in a statement on Wednesday. “If my amendment is accepted, financial firms would need to demonstrate to regulators that their failure would not undermine the financial stability of the American economy.”
The amendment would give a new oversight council of regulators authority to oversee the large firms, instead of the Federal Reserve, which has come under heavy criticism.
The amendment sets up a series of objective factors for regulators to consider, including size, scope, scale, exposure, leverage and interconnectedness.