Break up the "too big to fail" banks!! 5/3/2010 6:53:46 AM
For the safety of the American economy, the Wall Street giant banks need to be broken into smaller units that would no longer be "too big to fail". I received the following e-mail recently:
Even before the 2008 crisis, the four biggest banks were "too big to fail." Since then, Wells Fargo has grown 43% bigger; JP Morgan Chase has grown 51% bigger; and Bank of America is now 138% bigger than before the crisis. As economist Simon Johnson told Bill Moyers:
"The big banks became stronger as a result of the bailout. That may seem extraordinary, but it's really true. They're turning that increased economic clout into more political power. And they're using that political power to go out and take the same sort of risks that got us into disaster in September 2008...
the only thing that has changed is that these banks have gotten larger, more powerful, both economically and politically. And they've been flexing their muscles in Washington for the last year and a half... What Wall Street wants is they want nothing. They want to stop [reform] in its tracks and go back to where we were five years ago."
Today America's four largest banks - Citibank, Bank of America, JP Morgan Chase, and Wells Fargo - have assets of $7.4 trillion, equal to 52% of our entire GDP.
The collapse of any one would endanger the American economy, even the world economy. They are truly "too big to fail." They also have too much economic and political power because of their enormous size.
Senators Sherrod Brown (D-OH) and Ted Kaufman (D-DE) introduced a bold bill - the SAFE Banking Act (S. 3241) - to break up the big Wall Street banks. This may be the biggest reform of Wall Street and corporate power in 80 years.
According to the New York Times, "The [SAFE Banking Act] would reinforce a 1994 law that bars any single bank from holding more than 10% of the nation’s total deposits, or about $750 billion. In the years since then, large firms have obtained waivers or used loopholes in the law to exceed that ceiling." It would also limit total bank
borrowing to 2% of GDP.
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Folks, it is time for reform to regulate these big banks, to break them into smaller units that can safely be allowed to fail if they engage in practices such as in the recent past that end up bankrupting them again, and to limit their power over Congress and the American economy. These bankers learned nothing from what they did in nearly ruining the American economy by losing hundreds of billions of investors' dollars and millions of American jobs. They are right back to doing dubious practices again, while paying themselves millions in bonuses. It is time to regulate them! We all need to support legislation which will protect the American public from the excesses of these super-sized banks. Get involved before the next banking failure needs another bailout, which is where these banks are currently taking us again.
