‘Mean Business’

“This is a really impressive sign that we mean business on ending too-big-to-fail,” Vitter said in a release following the amendment’s passage. “Mega-banks are still receiving special handouts that create an uneven playing field -- making it harder for our community banks and credit unions to compete.”

Debate over an implicit subsidy for big banks was sparked in part by a Bloomberg View editorial that calculated that big banks save as much as $83 billion in borrowing costs because of the market perception that they would be bailed out by the government if they fell into financial distress.

Brian Gardner, senior vice president for Washington research at Keefe, Bruyette & Woods Inc., expressed skepticism that the Senate’s vote on a non-binding resolution would translate into legislative action.

Motherhood, Baseball

“Being against too-big-to-fail is like being for motherhood, apple pie and baseball,” Gardner said. “Nobody could possibly vote against that amendment because you’d be seen as in favor of the big banks.”

Jaret Seiberg, senior policy analyst at Washington Research Group, a unit of Guggenheim Securities LLC, estimated the chances of a bill similar to the Brown-Vitter amendment passing Congress at one in three.

“We do not see a specific path forward for this amendment, but will be watching to see if it gets added to regulatory reform legislation that might emerge this spring,” Seiberg said.

Large bank lobbying groups issued a brief on March 11 arguing that the Dodd-Frank Act, passed by Congress in response to the 2008 credit crisis, greatly diminished whatever advantage the biggest lenders held over smaller rivals.

“The financial services industry is strongly of the view that no institution should be too-big-to-fail, and that taxpayer money should never be used to rescue financial firms from their mistakes,” said Rob Nichols, president and chief executive officer of the Financial Services Forum. “Government policy should be to close down failing institutions, regardless of size, and prosecute individuals who break the law.”