Administration to Send Legislation to Congress to Authorize Large Bank Seizures

At the moment, the federal government has clear authority to seize a standard depository bank. But it’s not at all clear that such authority extends to the far-flung enterprises of the modern financial services conglomerate. And that, of course, has been an impediment to a Swedish-style solution for the problems of today’s large banks. But Binyamin Applebaum and David Cho report for The Washington Post that that’s about to change:

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president’s Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.

The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury’s role, are still in flux.

This—a time when the banks are very happy with the administration—is a good time to do this and lay the procedural groundwork for stronger measures. Now we’ll see if congress is ready to pass anything along these lines. Thus far, I feel like folks on the Hill have been more interested in complaining about this and that than in picking a preferred solution.