Durbin to introduce bill aimed at banks
U.S. Sen. Dick Durbin, D-Ill., said he plans to introduce an amendment to financial reform that would tax financial institutions that have not paid back in full money received in bailout funds as part of an effort to reduce the national deficit.
Durbin spoke about his plans to introduce three amendments to a Democratic financial regulatory reform bill during a news conference at his home Sunday. The bill would allow the Federal Reserve to create and enforce consumer protection regulations for large financial institutions.
The majority whip said, “It’s a bill that says no bank is going to be too big to fail.”
“I want the biggest financial institutions in America that received bailout funds to pay that back to the taxpayers, put that money back into the federal treasury to reduce the deficit,” he said. “It will basically say, ‘If you took billions of dollars out of the treasury and didn’t pay it back in full, you’ve got to pay the difference in a tax on your bank.’ This bank tax, I think, is only fair.”
Under the provisions of the bill, large financial institutions would have to create funds from their own money that would act as a bailout fund to be kept in reserve to prevent future collapse, Durbin said.
“This is an insurance fund,” Durbin said. “The idea behind it is the banks will have their own basic risk pools that they can draw on if they go down.”
The bill also would control the U.S. derivatives market, which some say has added fuel to the recent financial slump. It would also create a consumer protection agency that would ensure financial institutions are not using practices that hurt consumers.
Durbin said he plans to introduce amendments that would ensure the consumer protection agency is independent and to address problems associated with interchange fees, which are fees a business owner’s bank pays a customer’s bank using credit cards.
The Democratic Senator also says he wants to regulate user fees associated with credit cards. He said he has introduced language in the bill that would put a ceiling on interest rates.
“I tried to take a number I considered to be so high that even the biggest banks couldn’t argue with it,” he said. “I said we couldn’t have an interest rate over 36 percent. If you take the real interest rate paid on your credit card and you’re late one month…it’s going to get in the 20 to 30 percent rate in a hurry. I think we ought to have an absolute limit.”
Durbin said he also wants to shut down many local payday loan businesses that prey on people struggling during tough financial times.
“I want to put some of these folks on MacArthur Boulevard out of business, these payday loan operations,” he said. “These are awful, they’re exploiting people in Illinois, in our hometown of Springfield. They are charging interest rates that are outrageous.”