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Ohio Sen. slams ‘too big to fail’ report as rigged

It’s an inside bank job, a leading Senator charged about a new federal report on “too big to fail” institutions.

Sen. Sherrod Brown (D-OH) blasted a government report downplaying “too big to fail” banks at a Senate committee panel Thursday, saying the study relied on bank industry reports and sources suggested by a lobbying group.

“The GAO used three industry funded studies to design this report, and the GAO arranged meeting with corporate treasurers of companies suggested exclusively — I believe exclusively — by the Chamber of Commerce,” the Senate Committee on Banking, Housing, and Urban Affairs member said while questioning how the researchers came to their conclusion.

The panel session, which Sen. Brown chaired, comes as the four largest banks are about 25 percent larger than they were before the 2008 crisis, and bank analysts warn about interconnected risks in stock and debt markets.

The paper suggested that banks don’t get much of an advantage during the good times, but can borrow money more cheaply during a market crisis, according to the Government Accountability Office’s report, which was released Thursday.

“We take steps to identify and address bias and other threats to independence throughout all of our audits — including threats resulting from undue external influence from interested parties,” Lawrance Evans, Jr., director of financial markets and community investment at the GAO, told The Post after the hearing.

The persistent too-big-to-fail problem goes like this: Governments need super-sized banks, and won’t let them fail no matter how much they borrow, Sen. Brown said. Investors then perceive the banks to be less risky, and allow them to borrow even more money at a cheaper rate.

“These are what I call zombie institutions,” said Dr. Edward Kane, a finance professor at Boston College. “They can only prevail because of the black magic of the government-implicit guarantee.”