Republican senator proposes stripping Senate banking bill of help for big banks

By Jeff Stein

Sen. Bob Corker (R-Tenn.) released a plan Monday to eliminate proposed relief from capital requirements for some big banks in a bipartisan Senate bill expected to pass this week. (Reuters/Joshua Roberts)

Sen. Bob Corker (R-Tenn.) has proposed stripping the bipartisan Senate banking bill moving toward passage of a provision critics fear would allow some of Wall Street’s biggest firms to take on more financial risk.

Corker, who sits on the Senate’s Banking Committee, filed an amendment Monday to strike a section of the bill that could weaken one of the capital requirements imposed on banks in the wake of the 2008 financial crisis as a safeguard against another crash. The banking bill cleared a Senate procedural vote last week and is expected to pass as early as this week.

Liberal Democrats and some experts have said the banking bill, as currently drafted, opens the door for JPMorgan and Citigroup — two firms with more than $1 trillion in assets each — to lower their safeguards against a financial crisis. The bill’s drafters have said JPMorgan and Citigroup will not benefit from the change, while recognizing that the decision will ultimately be left up to banking regulators.

[10 years after financial crisis, Senate prepares to roll back banking rules]

At issue is a special capital surcharge imposed by regulators on banks holding more than $250 billion in assets. For every dollar of assets they have on their balance sheet, these banks are required to keep an offsetting percentage in capital.

Last week, Corker filed a separate amendment to the bill to make clear that only three custodial banks — Bank of New York Mellon, State Street and the Northern Trust Corporation — could benefit from the proposed weakening of the surcharge. (These banks primarily hold …read more