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kpete

(71,901 posts)
Wed Apr 3, 2013, 11:52 AM Apr 2013

Senator Bernie Sanders: "If an institution is too big to fail, it is too big to exist."

WED APR 03, 2013 AT 08:06 AM PDT
Too Big to Jail?
by Senator Bernie Sanders
We are supposed to be a country of laws. The laws should apply to Wall Street as well as everybody else. So I was stunned when our country's top law enforcement official recently suggested it might be difficult to prosecute financial institutions that commit crimes because it may destabilize the financial system of our country and the world.

"I am concerned," Attorney General Eric Holder told the Senate Judiciary Committee, "that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute -- if we do bring a criminal charge -- it will have a negative impact on the national economy, perhaps even the world economy."

The attorney general was talking about some of the same financial institutions that received billions, and in some cases trillions, of dollars in taxpayer bailouts after their greed, recklessness and illegal behavior plunged the country into a terrible recession. Over my opposition, Congress approved a $700 billion taxpayer bailout of financial institutions that were on the brink of collapse which some in Congress considered "too big to fail."

In addition, the Federal Reserve provided over $16 trillion in total financial assistance to these same institutions during the financial crisis (which only became public after an amendment I inserted into the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring the Fed to disclose this information).

The attorney general's view seems to be that if you are just a regular person and you commit a crime, you go to jail. But if you are the head of a Wall Street company, your power is so great that a prosecution could have destabilizing consequences with national or even worldwide implications.

In other words, we have a situation now where Wall Street banks are not only too big to fail, they are too big to jail. That view is unacceptable.

The attorney general's troubling acknowledgement has revived interest in an idea that is drawing more and more support. It is time to break up too big to fail financial institutions.

The 10 largest banks in the United States are bigger today than they were before a taxpayer bailout following the 2008 financial crisis.

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.

I will soon introduce legislation that would give the Treasury secretary 90 days to compile a list of commercial banks, investment banks, hedge funds and insurance companies that the Treasury Department determines are 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 becomes law, the Treasury Department would be required to break up those banks, insurance companies and other financial institutions identified by the secretary.

Breaking up the too big to fail financial institutions is a notion that has drawn support from some leading figures in the financial community. Richard Fisher, president of the Dallas Federal Reserve Bank, wrote this: "The safer the individual banks, the safer the financial system. The ultimate destination -- an economy relatively free from financial crises -- won't be reached until we have the fortitude to break up the giant banks." James Bullard, the head of the St. Louis Fed, also weighed in. "I do kind of agree that 'too big to fail' is 'too big to exist.'" Thomas Hoenig, the former Kansas City Fed president, was an early supporter of the idea of breaking up big U.S. banks. "I think [too big to fail banks] should be broken up. And in doing so, I think you'll make the financial system itself more stable. I think you will make it more competitive, and I think you will have long-run benefits over our current system, which leads to bailouts when crises occur."

In my view, no single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our nation's economic wellbeing. No single financial institution should have holdings so extensive that its failure could send the world economy into crisis. And, perhaps most importantly, no institution in America should be above the law. We need to break up these institutions because of the tremendous damage they have done to our economy.

If an institution is too big to fail, it is too big to exist.
http://www.dailykos.com/story/2013/04/03/1198903/-Too-Big-to-Jail

5 replies = new reply since forum marked as read
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Senator Bernie Sanders: "If an institution is too big to fail, it is too big to exist." (Original Post) kpete Apr 2013 OP
K/R (nt) NYC_SKP Apr 2013 #1
My mother would bring up the depression... socialindependocrat Apr 2013 #2
I was born between the Great Depression and WWII in 1940 Cleita Apr 2013 #4
From yesterday's DemocracyNow! OnyxCollie Apr 2013 #3
Thank You, Senator Sanders. bvar22 Apr 2013 #5

socialindependocrat

(1,372 posts)
2. My mother would bring up the depression...
Wed Apr 3, 2013, 12:17 PM
Apr 2013

I would ask if it could happen again.

She would say - No, they put a system of rules in place so it can never happen again.
Boy, was I relieved!

What in the hell are the oversight committees doing when they allow all these rules
to be overlooked (maybe that's what oversight means - To OVERLOOK)

Same with anti-trust laws and big companies buying out the little guys to reduce competition.

Same with employees who are "exempt" from overtime pay.

Same with "right to work" laws.

And now we have Lyin Ryan trying to pump more money toward the wealthy
as thought this will do something different than to create more of the problem we already have.

Let's get rid of the lobbyists - Why isn't that Illegal

I sent a letter to my Representative with all this stuff in it and he sent back a
form letter about women's reproductive rights.
But - I also, sent copies to 9 other people (senate and reps.)
We'll see if anyone gets tripped up in the cross-talk.

This is my beginning to an experiment to see where our letters really go...
and if anyone is really listening.

Cleita

(75,480 posts)
4. I was born between the Great Depression and WWII in 1940
Wed Apr 3, 2013, 02:50 PM
Apr 2013

and my parents told me the same thing and for forty years they were right, then RayGun happened.

 

OnyxCollie

(9,958 posts)
3. From yesterday's DemocracyNow!
Wed Apr 3, 2013, 02:49 PM
Apr 2013
http://www.democracynow.org/2013/4/2/headlines

Judge Dismisses Nearly All Claims Against Banks in Libor Scandal

A federal judge has dismissed nearly all the claims in lawsuits filed against major banks for involvement in manipulation of the global interest rate Libor. The rigging of Libor altered the benchmark for rates on trillions of dollars in transactions across the globe, meaning millions of borrowers paid the wrong amount on their loans. Plaintiffs, including the city of Baltimore, had filed antitrust and racketeering claims against firms such as Bank of America, JPMorgan Chase and Citigroup. But U.S. District Judge Naomi Reice Buchwald dismissed nearly all the claims, citing technical grounds that the plaintiffs cannot claim "antitrust injury." The dismissals were issued without prejudice, meaning they cannot be appealed. A limited number of claims under the Commodity Exchange Act were however allowed to proceed to trial. A handful of banks have already paid around $2.5 billion in fines for the Libor scandal, but have avoided criminal charges and payouts of damages to the scandal’s victims.

DOJ Official Who Led Financial Crisis Probe Returns to Law Firm to Defend Corporations

The former Justice Department official who led the agency’s investigation of Libor and the financial crisis is taking a post at a law firm that represents Wall Street firms who have faced federal scrutiny. Lanny Breuer left as head of the Justice Department’s criminal division last month. In the latest sign of the revolving door between Wall Street and agencies that purport to oversee it, Breuer is returning to his former employer, the law firm Covington & Burling, where he is expected to defend corporate clients and receive a salary of $4 million a year.

bvar22

(39,909 posts)
5. Thank You, Senator Sanders.
Wed Apr 3, 2013, 07:52 PM
Apr 2013

NOW, if we could only get some DEMOCRATS to stand in front of the TV Cameras and say the same thing.



[font color=firebrick][center]"There are forces within the Democratic Party who want us to sound like kinder, gentler Republicans.
I want a party that will STAND UP for Working Americans."
---Paul Wellstone [/font]
[/center]
[center][/font]
[font size=1]photo by bvar22
Shortly before Sen Wellstone was killed[/center]
[/font]

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