Sen. Bernie Sanders and Rep. Brad Sherman Unveil Bill to Bust Up Mega-Bank Menace

It’s going to take more than just a well-aimed blow from an underdog’s slingshot to bring down the banking monster that our current system of grabby-hands capitalism and compliant government has created.

On Wednesday, Sen. Bernie Sanders and Rep. Brad Sherman gave it a go from the legislative side, introducing a bill designed to make sure that financial institutions that have become so super-sized they threaten the public good — which is not just a very real threat but an ongoing reality since the Great Recession took hold in 2008 — are broken up before they further destroy the global economy.

Here’s one take on the news about Sanders’ and Sherman’s measure from The Wall Street Journal, a publication that needs to make sure it follows this story without appearing to give it too much weight:

Mr. Sanders and Mr. Sherman introduced a bill entitled the “Too Big To Fail, Too Big To Exist Act,” which would require financial regulators to name – and break up – financial firms whose failure would have catastrophic economic consequences. The line of criticism is nothing new for Mr. Sanders, who has introduced similar bills designed to dismantle big banks since 2009.

Large banks say they don’t receive unfair benefits from their size, and note that the 2010 Dodd-Frank financial law banned bailouts and established a regime for unwinding failing financial firms without taxpayer support.

“I fully expect Senator Sanders’ third attempt to break up banks to have the same impact as the previous two: zero,” Tony Fratto, a partner at Hamilton Place Strategies, said in a statement. “Breaking up banks would be incredibly disruptive in the short run and anti-competitive in the long run.” Hamilton Place Strategies represents some large financial firms.

Of course, “large banks” and their invested allies would say these sorts of things. Now let’s hear what Sanders had to say in his statement at Wednesday’s unveiling:

The enormous concentration of ownership within the financial sector is hurting the middle class and damaging the economy by limiting choices and raising prices for consumers and small businesses.

Today, just six huge financial institutions have assets of nearly $10 trillion which is equal to nearly 60 percent of GDP. These huge banks handle more than two-thirds of all credit card purchases, write over 35 percent of the mortgages, and control nearly half of all bank deposits in this country.

If the American people are wondering why tens of millions of Americans are being charged interest rates of more than 20 percent on their credit cards, while big banks can receive virtually zero interest loans from the Federal Reserve, the lack of competition in the banking industry is a major reason for that.

If Teddy Roosevelt were alive today, do you know what he would say? He would say break ‘em up. And he would be right.

And that’s exactly why we are here today.

The bill that I am introducing today with Congressman Brad Sherman would require regulators at the Financial Stability Oversight Council to establish “Too Big To Fail” list of financial institutions and other huge entities whose failure would pose a catastrophic risk on the United States economy without a taxpayer bailout.

This list must include, but is not limited to: JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo, and Morgan Stanley.

Click here to read the rest of Sanders’ statement, and here to read the text of the bill itself.

–Posted by Kasia Anderson