Bloomberg News

CEOs Group Calls Too-Big-to-Fail Bill Threat to U.S.-EU Accord

June 03, 2013

Caterpillar Inc. CEO Doug Oberhelman

Caterpillar Inc. Chief Executive Officer Doug Oberhelman said in a letter to lawmakers that “the United States should include financial services market access and regulatory cooperation issues in the negotiations," regarding a new prospective trade agreement with the European Union. Photographer: Jin Lee/Bloomberg

Prospects for a new trade agreement with the European Union are being threatened by measures that would boost capital requirements for the biggest banks, a group representing U.S. chief executive officers said in a letter.

Legislation including a bill proposed by Senators Sherrod Brown and David Vitter would hurt both the financial services industry and “globally engaged U.S. businesses” by forcing banks to shrink, Caterpillar Inc. (CAT:US) Chairman and CEO Douglas R. Oberhelman wrote to lawmakers in his role as head of the Business Roundtable’s International Engagement Committee.

“At the very moment of opportunity to increase transatlantic regulatory coherence and U.S. competitiveness, legislation is pending in Congress that, if enacted, would take the United States in the opposite direction,” Oberhelman wrote to leaders of the House Financial Services Committee and House Ways and Means Committee.

The bill sponsored by Brown, an Ohio Democrat, and Vitter, a Louisiana Republican, would impose a 15 percent capital requirement on so-called mega-banks such as JPMorgan Chase & Co. (JPM:US) and Bank of America (BAC:US) Corp. to reduce systemic risk and remove the perception they’d be bailed out in a crisis. The letter from the Business Roundtable, whose members include the heads of Wal-Mart Stores Inc. (WMT:US), General Electric Co. (GE:US) and Exxon Mobil Corp. (XOM:US), aligns the Washington-based group with financial industry lobbying against new restrictions for banks.

Broad Agreement

The 27-nation European Union hopes to complete talks on a broad agreement on investment and trade in goods and services with the U.S. within two years, EU Trade Commissioner Karel De Gucht said on Feb. 13. Wall Street firms have been pushing to use that negotiation, and others at the World Trade Organization and with Asia-Pacific nations, to change rules included in the Dodd-Frank Act.

“The United States should include financial services market access and regulatory cooperation issues in the negotiations,” Oberhelman and Eaton Corp Plc (ETN:US) CEO Alexander Cutler, chairman of the Business Roundtable’s Corporate Governance Committee, wrote in the letter. The agreement is “too big of an opportunity to exclude any sector from the negotiations,” they wrote.

The letter was sent to Representative Jeb Hensarling, the Texas Republican who leads the House Financial Services Committee, and the panel’s top Democrat, Representative Maxine Waters of California. It was also sent to Michigan Representatives Dave Camp, the Republican head of the House Ways & Means Committee, and Sander Levin, the top Democrat on that panel.

To contact the reporter on this story: Carter Dougherty in Washington at cdougherty6@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net


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