Financial Reform Bill Needs Sherrod Brown's Amendments

Banking reform legislation is hitting a feverish pitch. The current proposal has met with senate committee approval and now heads to the floor for discussion.

Among the hot items are the derivative trading exemptions in the committee version and a proposed amendment by Ohio Democrat Senator Sherrod Brown to limit the size of the largest banks. Most republicans want to see no change to those two items.

The derivative exemptions allow for unregulated derivative trading to continue in several categories. Opponents say the exemptions take most of the teeth out of the new reform and will set up the nation's economy for another bubble bursting recession.

Senator Brown's size limitation revolves around the concept of not having big banks that are "too big to fail."

One limitation already introduced by Brown would limit how banks could have ownership interest in clearing house companies who trade derivatives. He has recommended that banks with assets over $50-billion may only own 20% interest in those clearinghouses.

Browns other proposed limit is on the actual size of the banks themselves. He wants to place a cap on a banks liabilities equal to 3% of the Gross Domestic Product(GDP). Based on the 2008 GDP that would result in a limit of $426-billion. Currently the top six banks have 60% of the GDP. Fifteen years ago the six largest bank had 17% of the GDP.

These amendments are expected to be met with with a lot of resistance from lobbyists and the banks themselves. Reform watchers think the 2010 reform package will be ineffective without these changes. What do you think?

Read more on The Hill http://thehill.com/homenews/senate/91517-financial-reform-takes-center-stage-in-senate-