A Democrat Senate Takeover Would Rekindle Big Bank Breakup Debate

Editors' pick: Originally published Nov. 2.

With less than a week before voters head to the polls to select their local congressional candidates -- and presidential nominees Hillary Clinton or Donald Trump -- there is a real possibility that Democrats could retake the Senate.

If they do, it would give Democrat Sherrod Brown the banking committee chairmanship he needs to advance his capital-raising, break-up-the-banks legislation and agenda -- representing the largest risk to the biggest U.S. financial institutions. 

Brown would be in a position to spotlight legislation he co-sponsored with Louisiana Republican Sen. David Vitter that would raise capital buffers at banks to levels that would push big banks to divest assets.

"The real focus has really been putting higher capital levels on the largest financial institutions based on their mix of business and that is the gist of the Brown-Vitter bill...," said Independent Community Bankers of America vice president Paul Merski. "There would be a greater focus on getting that over the winning line in a Brown committee."

The largest banks, including Bank of America ( (BAC) ), JPMorgan Chase ( (JPM) ), Wells Fargo ( (WFC) ), Citigroup ( (C) ), Morgan Stanley ( (MS) ) and Goldman Sachs ( (GS) ), are most likely to be hit with tougher rules.

Citigroup and Wells Fargo are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells C or WFC? Learn more now.

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