Sen. Elizabeth WarrenElizabeth WarrenDemocrats: Where the hell are You? Dodd-Frank ripe for reform, not repeal Senate Dems offer bill to curb tax break for Trump nominees MORE (D-Mass.) has found a new conservative counterpart to help lead her charge against the biggest banks on Wall Street: Sen. David VitterDavid VitterRepublican wins La. Senate runoff in final 2016 race Trump questions merits of early voting WATCH LIVE: Trump speaks at GOP rally in La. MORE (R-La.).
The unlikely pair have joined forces on two bills in the last week, which would make life tougher for Wall Street, particularly by setting sights on a key institution monitoring them: the Federal Reserve.
And that measure came just six days after the two proposed legislation that would alter the Fed’s structure, requiring top Fed officials to publicly vote on any large settlements reached with bad-acting banks, and giving each Fed board member his or her own staff.
Those measures are being rolled out as Senate Banking Committee Chairman Richard Shelby (R-Ala.) is preparing to move his own broad financial regulation package, meaning these bills could be offered as amendments at the committee, of which Warren is a member.
The latest bill takes direct aim at the notion that the during the last crisis, the Fed shelled out huge loans to a small number of huge, and hugely influential financial institutions, at extremely low interest rates. The Fed reportedly loaned out over $1 trillion at the height of the collapse, with individual banks receiving as much as $100 billion in support. Critics on the left and right argue the central bank has done little to curb that broad bailout authority in the subsequent years.
The new bill would allow the Fed to engage in emergency lending only if more than just a few institutions can participate, and would bar the central bank from loaning to any bank that is already insolvent. Furthermore, any emergency loans must come with a hefty interest rate – at least five percent higher than the going rate for U.S. Treasury debt.
The bill would also change existing law to bar Goldman Sachs and Morgan Stanley from engaging in the actual holding of physical commodities. Banks are typically barred from holding physical commodities like aluminum or copper, but those two were grandfathered past that ban.
While a conservative Republican, Vitter is no stranger to doing battle with the banking industry. He paired with Sen. Sherrod BrownSherrod BrownSenate passes stopgap funding bill, averting shutdown Senate advances funding measure, avoiding shutdown Stopgap funding bill poised to pass Senate before midnight deadline MORE (D-Ohio), now the top Democrat on the Banking Committee, on legislation that would limit the size of the nation’s biggest banks.
And he was the lone GOP voice criticizing the inclusion of provisions rolling back parts of Dodd-Frank as part of a critical funding bill at the end of 2014.