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Less is more when it comes to the new top American banking lawmaker. The next chairman of the Senate Banking Committee needs to minimize conflicts of interest with the industry the body oversees, giving Ohio's Sherrod Brown the edge over his New York counterpart Charles Schumer. Brown may have some fringe views about breaking up banks, but he's more likely to challenge the status quo than a friend of Wall Street.
Since the committee's top three Democrats may have stronger interests outside banking, Brown looks next in line. He's a huge advocate for Main Street manufacturing and a staunch critic of Wall Street. During the Dodd-Frank Act debate, he co-authored a failed amendment that would have broken up big banks like JPMorgan, Wells Fargo and Bank of America by limiting their share of U.S. deposits and non-deposit liabilities.
Since then, he has continued to trumpet splitting up the titans as a way of ensuring no institutions are too big to fail. He sponsored a successful bill in the Senate last year for the Government Accountability Office to study the implicit subsidy conferred on large banks and will soon propose a biting capital surcharge on giant institutions.
Such a foe of Big Finance may seem too extreme to lead the committee that governs the industry. But Schumer, the likeliest alternative, is biased in the other direction. Though he has talked tough in recent years, from 2007 through 2012 he raised nearly $3-million in campaign contributions from securities firms, 14 per cent of his total, according to opensecrets.org. The same group gave Brown just $270,000 and didn't break into his top 10 industry donors.
To some extent, a Brown-led banking committee would be a blessing in disguise for Schumer, who could be faced with having to vote against policies that, while on balance may favor the national interest, would harm his direct constituents in New York.
And, anyway, with Texas Republican Jeb Hensarling running the House Financial Services Committee, Schumer has little to worry about. Hensarling is as far to the right as Brown is to the left. Though there is, of course, an increased risk of gridlock, the balance between a firebrand and a friend of finance might actually ensure only truly good reform ideas make the grade.