Senator Bernie Sanders tells banks: Too big to fail? Too big to exist! The Sanders plan breaks up big banks. Sen. Sanders (I-VT) issued a statement through his spokesperson earlier this week putting the country’s biggest banks on notice that, under his presidency, their days are numbered.
Senator Bernie Sanders tells banks: Too big to fail? Too big to exist! The Sanders plan breaks up big banks. Sen. Sanders (I-VT) issued a statement through his spokesperson earlier this week putting the country’s biggest banks on notice that, under his presidency, their days are numbered.
According to the statement, “Sen. Sanders believes that it is necessary to break up large financial institutions not only because we need to prevent another Wall Street bailout, but because of the incredible concentration of ownership and power that now rest with a handful of these huge institutions. In fact, the six largest financial institutions in this country now have assets equivalent to more than 56 percent of our nation’s GDP, issue two thirds of the credit cards, and one third of the mortgages.”
Those are frightening statistics, especially when one considers what happened during the last Wall Street bailout and what could happen to a nation still recovering if it happened again. A Sanders administration “would send a clear message to financial regulators that they need to do everything within their power to break up financial institutions so that they can no longer threaten the financial well-being of the American people.”
Many people, not just presidential hopefuls, are quick to complain about certain situations, but slow to offer any real solutions. Indeed, one need only look to the Internet to see that some “armchair advisors” don’t have any solutions to offer at all. According to the Sanders press release, that’s not the case here.
The Sanders plan is ambitious and looks like this:
- The secretary of the Treasury must create a “Too-Big-to-Fail” list of “commercial banks, shadow banks* and insurance companies” that, if they fail, would create a disaster for the U.S. economy unless taxpayers bailed them out.
- This list must be compiled “within the first 100 days” of the Sanders administration.
- The Sanders administration would then work with the Federal Reserve and other financial regulators, using the power of Section 121 of the Dodd-Frank Act (Mitigation of Risks to Financial Stability), to break up the mega-institutions on the “Too-Big-to-Fail” list.
- Another key part of the Sanders plan is the enactment of a 21st Century version of the Glass-Steagall Act, which would “clearly separate commercial banking, investment banking and insurance services.”
According to the press release:
“President Franklin Roosevelt signed the Glass-Steagall Act into law precisely to prevent Wall Street speculators from causing another Great Depression. And, it worked for more than five decades until Wall Street watered it down under President Reagan and killed it under President Clinton. That is unacceptable and that is why Sen. Sanders will fight to sign the Warren-McCain bill [reviving Glass-Steagall] into law.”
*“Shadow banking, as usually defined, comprises a diverse set of institutions and markets that, collectively, carry out traditional banking functions — but do so outside, or in ways only loosely linked to, the traditional system of regulated depository institutions.” ~ Wikipedia
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