Sherrod Brown and David Vitter say that momentum is building in their favor. | REUTERS Brown-Vitter struggling for support

When Sherrod Brown and David Vitter introduced a bill in April to crack down on big banks, it was met with great fanfare and excitement from reform advocates eager to see Washington take another whack at Wall Street.

But more than a month later, the bill has attracted little support in Congress, even from senators sympathetic to its overarching goal.


So far, only two co-sponsors have gotten behind the legislation, and one of them says he is having second thoughts.

The lukewarm reception to the Brown-Vitter bill illustrates the difficulty that advocates of tougher rules for the largest banks have in advancing their cause on Capitol Hill. In fact, even as lawmakers on both sides of the aisle have ratcheted up their calls to crack down on Wall Street in recent months, the only financial regulatory bills showing any sign of life in Congress are a set of proposals that would scale back parts of the 2010 Dodd-Frank law — those concerning derivatives markets.

“It’s difficult to see a path for substantive legislation this year short of another catastrophe,” said Bart Naylor, Public Citizen’s financial policy advocate. “We tend to only pass substantive legislation when the world pays a huge price during a financial crisis. Unfortunately, that’s the cost of reform.”

Both Brown, an Ohio Democrat, and Vitter, a Republican from Louisiana, told POLITICO that momentum is building in their favor despite the pushback from Wall Street and that they are encouraged by the support the bill has received. A Brown aide said the duo will roll out several additional co-sponsors in the coming weeks.

“I expected the opposition from Wall Street, from large interest groups and companies that outsource, but to see this kind of support from people in both parties outside the institution has been very helpful,” Brown said. “I always want things to move faster, but it is further along today in terms of support than I would have ever guessed a year ago.”

Vitter dismissed the suggestion that the legislation was failing to gain support, saying this was a message being promoted by “the cheerleaders and lobbyists for the megabanks and wannabe megabanks” that “underestimate the public’s distrust with Wall Street.”

The legislation takes direct aim at the largest U.S. banks — including JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs, which have assets of $500 billion or more — by requiring them to meet tougher capital standards, or how much they fund themselves through equity instead of debt. The argument is that the tougher standards will make the banks more stable and remove whatever advantage they have over smaller competitors because creditors believe the financial giants will be bailed out if they start to go under.

While there was little expectation that the legislation would quickly move through the Senate, it’s the lack of support from fellow senators sympathetic to putting a tighter leash on big banks that has been notable.

Sen. Jack Reed (D-R.I.), who has introduced legislation to impose tougher penalties for Wall Street fraud, said the 2010 Dodd-Frank law “clearly instructs the regulators at the Federal Reserve” to determine adequate capital levels for banks, and that he doesn’t believe it’s up to lawmakers to set those rules.

“Right now, the Federal Reserve has the authority to raise it to capital levels that they think are appropriate,” he said.

Sen. Carl Levin (D-Mich.), whose Senate Permanent Subcommittee on Investigations recently released a scathing report on JPMorgan’s “London Whale” trading losses, said that, although he supports raising capital standards for big banks, there are parts of the bill that he and his staff find potentially problematic.

As of Friday, the bill has just two co-sponsors: Sens. Dick Durbin (D-Ill.) and Jeff Sessions (R-Ala.). Sen. Mark Kirk (R-Ill.), who was an initial co-sponsor, took his name off the bill last month, citing a “ miscommunication.” And Sessions told POLITICO that he is still deciding whether to remain a co-sponsor because “it’s a complex area and you need to be careful that you first do no harm.”

But if lawmakers have been slow to warm up to Brown’s and Vitter’s proposal, the introduction of the bill appears to have injected some urgency into the debate among federal regulators about bank capital standards.

Since April, a slew of regulators — including the Federal Reserve’s Janet Yellen and Daniel Tarullo, as well as Comptroller of the Currency Thomas Curry — have spoken out about beefing up capital and liquidity requirements for the largest banks.

The Brown-Vitter bill has “served as a vehicle to push the bank regulatory agencies, and specifically the Federal Reserve, to discuss imposing higher leverage capital requirements on the ‘too big to fail’ banks and force the regulators to go further than they would have gone on capital requirements against the six largest banks in the United States,” said Independent Community Bankers of America President Cam Fine, who has publicly backed the bill. “So there’s no question that the Brown-Vitter bill not only ignited the debate and took it to a different level, it galvanized those that have been speaking out on this issue for some time.”

With the exception of community banks, the banking industry has largely opposed the legislation. Banks have significantly upped their capital levels since the financial crisis, critics of the bill argue, and Brown-Vitter would hurt banks’ ability to lend.

But even as the banking industry has publicly dismissed the Brown-Vitter bill as having no legislative future, lobbyists in Washington were concerned enough to quickly get on the offensive and try to kill the proposal before it could gain any steam.

“It’s not a serious proposal. It’s intended to attack the banks,” said Tony Fratto, a former White House and Treasury official in the George W. Bush administration who is now a partner at Hamilton Place Strategies. “If you support Brown-Vitter, then your view is that there is no net benefit to having large, globally active American banks.”

The bill’s prospects, or at least the policies behind it, could change dramatically if another banking scandal erupts. And if it does, the senators have positioned themselves to pounce on the opportunity.

“It’s something that Brown and Vitter are going to keep out there and keep alive and keep talking about,” said an industry executive following the debate. “It’s one of those things where they’re treading water with it until … the next big bank scandal — the next ‘Whale.’”