Warren, Vitter Introduce Bailout Prevention Act

Press Release

U.S. Senators Elizabeth Warren (D-Mass.) and David Vitter (R-La.), members of the Senate Banking Committee, today introduced the Bailout Prevention Act, legislation to halt megabank bailouts during a financial crisis by responsibly limiting the Federal Reserve's lending authority. It would also close a loophole that creates risk-taking exemptions for megabanks Goldman Sachs and Morgan Stanley.

"It's no secret that Too Big to Fail is still around. If another financial crisis happened tomorrow - 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 common sense reforms to the Fed's emergency lending powers to protect taxpayers the next time the megabanks lead us into another crisis."

"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," said Warren. "This bill would make our financial system safer and help level the playing field between the megabanks and their smaller competitors."

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