Expressing concerns that “too big too fail” banks have also become “too big to jail,” Sen. Bernie Sanders, I-Vt., said Wednesday that he will introduce legislation to break up the nation’s biggest financial institutions.
“When we talk about Wall Street, and the greed and the recklessness and illegal behavior on Wall Street, I must say that I was really stunned when the attorney general of the United States recently suggested that it might be difficult to prosecute Wall Street CEOs,” he said.
Sanders was expressly pointing to the recent pronouncement made by Attorney General Eric Holder that the Justice Department would continue to not prosecute big banks for fear such action would have negative consequences on the national and world economies.
“That is unacceptable and that has got to change because America is based on a system of law and justice,” Sanders said.
He later added, “If an institution is too big to fail, it is too big to exist.”
U.S. banks have become so big that the six largest financial institutions in this country (J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) today have assets of nearly $9.6 trillion, a figure equal to about two-thirds of the nation’s gross domestic product. These six financial institutions issue more than two-thirds of all credit cards, over half of all mortgages, control 95 percent of all derivatives held in financial institutions and hold more than 40 percent of all bank deposits in the United States.
Sanders’ legislation would give Treasury Secretary Jacob Lew 90 days to compile a list of commercial banks, investment banks, hedge funds and insurance companies that he deems too big to fail. The affected financial institutions would include “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.”
Within one year after the legislation became law, the Treasury Department would be required to break up those banks, insurance companies and other financial institutions identified by the secretary.