Anybody who doubts that politics does indeed make strange bedfellows need look no further than Sen. Sherrod Brown, a liberal Democrat from Ohio, and Sen. David Vitter, a conservative Republican from Louisiana.
Brown and Sherrod have teamed up on a request to the Government Accountability Office that it do a comprehensive study of the effect of federal officials following policies that assume some financial institutions are "too big to fail" (TBTF) without inflicting serious, possibly permanent damage on the U.S. economy.
More specifically, the two senators want GAO to examine "the economic benefits that bank holding companies with more than $500 billion in assets receive as a result of actual or perceived government support."
They put their request in a joint Jan. 1, 2013, letter to Comptroller General of the United States Gene Dodaro, who heads GAO.
Brown is chairman of the Senate Committee on Banking, Housing and Urban Affairs subcommittee on financial institutions and consumer protection, while Vitter is the ranking Republican on the panel.
Policies based on the TBTF assumption first came to national prominence during the Great Recession of 2008 when President George W. Bush and Treasury Secretary Henry Paulson persuaded Congress to approve the $700 billion Troubled Asset Recovery Program (TARP) to bail out Wall Street titans who invested too heavily in government-backed sub-prime mortgage investment deals.
Among much else, Brown and Vitter want GAO to assess the accuracy of studies claiming having TBTF guarantees gives large investment institutions sizeable advantages over rivals, especially in lowering their borrowing costs.
Go here for the complete text of the Brown-Vitter letter to GAO.
