By Peter Schroeder - 12/05/13 02:26 PM EST
A bipartisan pair of senators told Treasury Secretary Jack Lew Thursday that it was too soon to take a “victory lap” on ending “too big to fail.”
Lew said Thursday that he was confident that regulators now had the tools to ensure the government would never have to step in and bail out an ailing financial institution. But Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) said such a prediction was premature, as the two continue to push for further restrictions on big banks.
“It is premature for anyone to take a victory lap when ‘too big to fail’ policies are still alive and well,” Brown said. “Despite what some on Wall Street and in Washington may say, our work is not finished.”
The pair argued that massive financial institutions, which have only gotten larger since the 2008 crisis, still enjoy a funding edge in financial markets. That advantage is evidence that the markets still see those giants as enjoying an implicit government backstop and could be bailed out again if another crisis were to emerge.
The two have been pushing legislation that would subject the biggest banks to further restrictions, and have managed to commission a study by the Government Accountability Office on whether big banks enjoy any advantages due to their size or perceived government support. That study not been released yet.
Vitter and Brown are among the most vocal of a persistent group of lawmakers who remain unconvinced that new financial regulations have done enough to curb Wall Street.
In remarks Thursday, Lew said that he was confident regulators implementing the Dodd-Frank financial reform law have the tools they need to end “too big to fail” if and when another large institution is in trouble.
Earlier this year, he said that if regulators were unable to put an end to that era, more steps would be needed. But with many major pieces of the Wall Street overhaul being finalized, he was confident the necessary powers were in place.
However, he also acknowledged that it would be impossible to pinpoint when “too big to fail” was erased, and the government would be ready to do more if it proved necessary.
“Based on the totality of reforms we are putting in place, I believe we will meet that test — but to be clear, there is no precise point at which you can prove with certainty that we have done enough,” he said at the Pew Charitable Trusts. “If, in the future, we need to take further action, we will not hesitate.”