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38 VISIT US AT BOOTH 331 DURING THE FIVE STAR CONFERENCE AND EXPO SENATORS INTRODUCE BILL LIMITING FED'S LENDING AUTHORITY, ENDING 'TOO BIG TO FAIL' Two members of the U.S. Senate Banking Committee, Elizabeth Warren (D-Massachusetts) and David Vitter (R-Louisiana), have introduced legislation attempting to stop the government from bailing out large financial institutions, according to a recent announcement on Warren's website. e Bailout Prevention Act is aimed at ending "too big to fail" by limiting the lending authority of the Federal Reserve. "If big financial institutions know they can get cheap cash from the Fed in a crisis, they have less incentive to manage their risks carefully, which further increases the chance of another financial crisis," Warren said. "is bill would make our financial system safer and help level the playing field between the megabanks and their smaller competitors." Following the multitude of multibillion-dollar bailouts of several of the nation's largest finan- cial institutions during the financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 directed the Fed to limit its spending authority. e Fed's proposed rule, however, has done little to this effect, according to Warren's announcement. Warren, Vitter, and 13 other senators sent a letter to the Fed last August asking the central bank to strengthen its lending restrictions, but the Fed has not acted on the issue. "It's no secret that too big to fail is still around. If another financial crisis happened tomor- row—and that's still a real risk—nobody doubts that megabanks would be calling on the federal government to bail them out again," Vitter said. "Our legislation makes commonsense reforms to the Fed's emergency lending powers to protect taxpayers the next time the megabanks lead us into another crisis." Other changes the new bill would bring about include requiring lending programs to be truly broad-based, restricting lending to only those institutions that are not insolvent, and requiring lending to be provided at a penalty rate. It is the second bill in a week introduced by Warren attempting some sort of Federal Reserve reform. Warren has been a major figure in Wall Street reform since the crisis and was the chief architect of the controversial Consumer Financial Protection Bureau. e previous week, Vitter and Warren introduced the Fed Accountability Act, which is aimed at increasing the independence of the individual Fed governors to improve the central bank's decision-making process and at providing more transparency to votes on enforce- ment actions taken that total more than $1 million.

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