SB39

The Protect our Recovery through Oversight of Proprietary Trading Act (P.R.O.P. Trading Act) Sponsors- RSharafuddin (D-OR).@MCribari (R-NY). RStuder (I-OR)

Purpose- The purpose of this bill is to stabilize the economy by eliminating extremely high risk speculation among large banks and corporations and setting stricter standards on giving out large loans.

Eligibility- This bill will apply to every large corporation as deemed by the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC)

Terms and Benefits- Our bill will prevent banks from engaging in proprietary trading or from sponsoring/owning any hedge funds. Proprietary trading is when companies make highly risky investments where they stand to lose lots of money. Often, banks gamble with money in the securities market with taxpayer guaranteed funds. It’s economically inefficient, and creates huge conflicts of interest between clients, investors, and the bank. They also create huge taxpayer-funded bailout bills when the gambles turn sour. Banks should not be taking unnecessary and dangerous risks all in the pursuit of short-term profit. They should not be recklessly gambling with deposits that are backed up by the taxpayers. Our bill will fix this. Our bill will also place more limits and restrictions on nonbank corporations that engage in proprietary trading. Although the nonbank companies’ assets are not taxpayer funded, it is still problematic when large companies engage in proprietary trading. When they lose too much money, they may go out of business, and when they do that, they take down other companies too. This causes millions of people to lose their jobs. The economy is like a giant spider web, and when large companies go down, they take down large sections of the web. This bill would seriously discourage them from proprietary trading and therefore make the economy more stable. Any banks or companies that have branches that deal with the types of trading prohibited in this bill will be given 2 years to be shut down. The power to regulate the above will be given to the Board of the Federal Reserve and the F.D.I.C. (Federal Deposit Insurance Corporation).

Fiscal Impact We believe our bill will have absolutely no fiscal impact, or if it does have a fiscal impact, it would be so small that it could safely be ignored. Our bill makes use of two already existing programs and does not require them to create more branches or hire more people. It simply gives these already existing programs more power to regulate the economy. They can use this power without spending significant amounts of money.