In these hostile times, it's heartening to see there's still one thing able to bring Republicans and Democrats together: hating on banks.
The U.S. Senate late Friday night agreed unanimously, by a vote of 99-0, to end whatever financial-market subsidy banks get by being too big to fail.
Unfortunately, the vote was nothing more than theater without any real world implications: The subsidy measure was non-binding, and it was attached as an amendment to the Democrats' 2014 budget proposal, which everybody knows is going nowhere.
Still, it is impressive that lawmakers from both sides of the aisle have found common ground on this issue. The subsidy amendment was proposed by the seemingly unlikely duo of Sherrod Brown (D-Ohio) and David Vitter (R-La.), and it follows the recent harmonic convergence of Federal Reserve Chairman Ben Bernanke (a Republican) and Sen. Elizabeth Warren (D-Mass.) on the topic of whether Too Big To Fail is still a massive problem.
On the other side of the fence, naturally, are banks, and a stray defender or two. They argue that their size is a good thing and that they don't get any sort of benefit from the market believing the government will never let them fail. Bernanke and at least three independent studies disagree, saying the largest banks enjoy lower borrowing costs than other banks because of their implied government support. Bloomberg View recently estimated this subsidy amounts to $83 billion a year.
The banks, and their stray defenders, object strenuously to Bloomberg View's numbers, call the method flawed and say they might even have to pay more for borrowing than other banks. As such, they and Bloomberg View have vollied arguments at each other several times in the past few weeks.
Even if big banks received no subsidy at all, the fact that there are banks so large that they cannot be allowed to fail, or even be prosecuted for crimes, without crushing the economy would still be a problem. The main question at this point seems to be finding the right solution. But the first step is always admitting the problem exists, and both sides of our politics appear to have taken it.
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