Simon Johnson is pointing to the Kanjorski amendment as a way to break up the 6 large banks who pose systemic risks, right now.
This is to patch up the Dodd bill and gives an in to go ahead and break up the 6 big banks now.
The approach in the Dodd bill simply will not work.
There is still a feasible alternative, based on a different approach – that proposed by Representative Paul Kanjorski (chairman of the Capital Market Subcommittee of the House Financial Services Committee) and adopted as an amendment in the House bill.
This amendment will allow federal regulators to preemptively break up large financial institutions that – for any reason – pose a threat to financial or economic stability in the United States. (Yes, there is a weak version of this idea currently in the Dodd draft, but it is very weak – allowing regulators to act “only as a last resort”; see p.3 of the official bill summary.)
Representative Kanjorski has exactly the right idea, but we need to go a step further – because we cannot at this point reasonably expect regulators to implement properly. Remember, in the Catch-22 type nature of these issues, the regulators can easily say: Implicit in Congress’s decision not to mandate a break-up, will infer a congressional intent that no institutions currently meet the criteria.
Folks, we should be paying attention to those pouring over any way in to actually obtain financial reform and ...you should write your Senators demanding they pass their findings.
Believe me, we're not getting much of anything and if any expert out there sees a road in to actually doing something, we should take it.