An Enemy Far More Threatening Than Elizabeth Warren Could Soon Have Major Power Over Wall Street

Linette Lopez

When people talk about politicians that aren't friendly to Wall Street, they always bring up Senator Elizabeth Warren (D-MA).

They rarely remember a man who's quietly proposed more bipartisan Wall Street regulation than Warren — Ohio Senator Sherrod Brown (D).

Now is the time to remember him though, because if the Democrats keep control of the Senate Brown could end up heading the powerful Senate Banking Committee according to Guggenheim Securities analyst Jaret Seiberg

"If Democrats keep the Senate, Sen. Sherrod Brown may be the next chairman," Seiberg wrote in a recent note. "This is the senator who wants the biggest banks to maintain a 15% equity to assets ratio. Despite this, he also would help the regional banks, small banks and insurers and could favor raising the SIFI [Systemically Important Financial Institutions] threshold to $100 billion or more."

That 15% ratio is part of a bill Brown proposed along with Senator David Vitter (R-LA). It's called the "Terminating Bailouts for Taxpayer Fairness" Act and is meant to end 'Too Big To Fail.'

TBTF- See what they did there?

The bill's very existence is a testament to Brown's ability to build coalition while avoiding negative attention. He's made it clear that he believes Wall Street banks "continue to jeopardize our financial system because of their size, their complexity, their interconnectedness." But despite that frank manner of speaking, and the fact that he's been in the Senate since 2006, his name doesn't illicit the same knee-jerk reaction on Wall Street as Warren's does.

"I'm just building the coalition here fairly quietly," Brown said in an interview with Business Insider last year. "It's not an issue that people rally around so much — breaking up the banks, limiting their liabilities, that's not something that excites people particularly. But I think it will. We're seeing intellectual and political support growing, and I think we'll continue to see that."

Brown has also been one of the main politicians driving the federal investigation into whether or not big Wall Street banks get a funding advantage from the government. The Government Accountability Office recently released a report on this matter at Brown and Vitter's request, and it found that the advantage was inconsistent, and sometimes quite small.

But that doesn't mean Brown and Vitter are done.

"Well first of all the megabank seems to be arguing there was never a subsidy, no subsidy. Now they're having to admit, yes, there was or is a subsidy, and they're arguing about the amount of it," Vitter said in an interview with Bloomberg TV back in July. "The report says it may have gone down some with economic conditions and getting much better. The report also says if we go back to the same crisis conditions of 2008 the subsidy goes up. So I think clearly there is a too big to fail subsidy or cost of funding advantage. And I don't think it's been reduced significantly if you factor in the general economy."

Of course, for Wall Street there is a bright side. If Republicans take control of the Senate, Richard Shelby (R-AL) would take over Senate Banking. And while Shelby is a critic of Too Big To Fail, he's also a gotten more support (read: money) from the securities industry over the last five years than any other industry.

Guggenheim also points out that if Brown were to take over the committee he might go easier on banks to show that he's not just an anti-Wall Street firebrand.

 Or he could just let it all hang out.

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