The U.S. Senate is set to vote on legislation Thursday that would dramatically expand the number of federal financial institutions that can open up their own branches and allow the states to set up their capital markets to support financial institutions.
The bill is one of several bills that lawmakers are trying to pass in the wake of the devastating wildfires in Texas, Oklahoma and Florida that killed at least 3,000 people and displaced millions.
Sen. Jon Tester, D-Mont., is one member of the Senate who has spoken out against the bill, calling it a backdoor bailout for big banks and other financial institutions.
“This is not about helping the American people,” Tester said.
“This is about creating a special class of people, which is large, which can’t get out of the banking system, which are too big to fail.
It’s a backdoor bail-out.”
Tester’s legislation would expand the existing capital markets by allowing the state to set its own rates and establish its own clearinghouses for small- and medium-sized businesses.
The bill would also allow states to open their own exchanges, including the online marketplace of exchange and futures trading.
The Senate bill, which has not been officially introduced, would create new entities to create a new state financial services regulatory agency.
It would create a state regulatory agency to oversee the capital markets.
Tester also wants to expand the size of the state financial institutions commission, which he said could include representatives from local governments and the state banking system.
He also wants the state of California to create its own regulatory agency, a move that could be controversial given that the state has already opened its own exchange.
“We need to be doing things that are not just a big-bank bailout, but to be a financial system that actually provides services to people and supports them in a way that allows them to make good decisions,” Testers said.
Testers has introduced several other legislation aimed at easing the financial markets after the wildfires in California and Florida, which killed more than 3,200 people and affected millions more.
Testers’ bill also would give the state the authority to set a cap on the amount of mortgage interest that banks and insurance companies can charge.
Tests said that the cap should be set to a level that will not drive up housing prices and would encourage people to refinance their mortgages.
“I’m all for doing things, but it’s really important that we have a robust capital markets that actually supports people,” he said.