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After Saying That Big Banks Should Be Made ‘Smaller,’ Cornyn Votes Against Breaking Them Up

By Zaid Jilani on April 23, 2010 at 5:21 pm

"After Saying That Big Banks Should Be Made ‘Smaller,’ Cornyn Votes Against Breaking Them Up"

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cor1 Last week, the Huffington Post’s Ryan Grim and Sam Stein interviewed several Republican senators about their views on making megabanks that threaten the economy smaller. The bloggers concluded that “Republican senators are beginning to embrace” breaking big banks up, with a number of the legislators endorsing the idea reducing the maximum size of banks.

One senator they talked to was Sen. John Cornyn (R-TX). Cornyn told the Huffington Post that he views Democratic plans as a “perpetual bailout” and prefers making banks “smaller in order to avoid” the problems we saw during the financial crisis:

Last week, Sen. John Cornyn (R-Texas) and Minority Leader Mitch McConnell (R-Ky.) met with 25 top Wall Street executives in New York City to hear their concerns regarding reform. Both say they oppose the Democratic plan as a perpetual bailout. “By creating a fund, that’s an invitation to Congress to spend that money just as we have in the highway trust fund and the surplus in Social Security,” Cornyn said.

HuffPost asked Cornyn what his alternative solution to the Democratic plan would be. “I think we need to look at the concentration of banking in just a handful of entities that threaten our economy if they go under,” Cornyn said. “They need to be smaller in order to avoid that problem and I would support efforts to move in that direction.”

Yesterday, Cornyn got a chance to put his money where his mouth is. The Senate Budget Committee held a vote on Sen. Bernie Sanders’ (I-VT) amendment to the financial regulatory reform bill that would’ve broken up some of the nation’s largest financial instutitions that are considered “too big too fail.” Cornyn voted against the amendment, joining all of his Republican colleagues on the committee except for Sen. Jim Bunning (R-KY). Democratic Sens. Warner (VA), Nelson (NE), Conrad (ND), and Begich (AK) also voted no, causing it to fail 10-12.

Cornyn’s vote against the Sanders amendment isn’t the only time the senator has demonstrated that his public rhetoric against Wall Street is less than genuine. Two weeks ago, the senator traveled alongside Senate Minority Leader Mitch McConnell (R-TX) to New York City to attend a private fundraiser with two dozen hedge fund managers and other corporate elites to enlist “Wall Street’s help” in funding Republican campaigns in the fall and defeating any tough financial regulatory reform legislation.

Sens. Sherrod Brown (D-OH) and Ted Kaufman (D-DE) plan to introduce an amendment to the final financial regulatory bill next week that would limit the size of the largest banks. The amendment “would limit large banks by capping at 10 percent the share of the U.S. total insured deposits it can hold, and restrict limits on leverage.”

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