Legislators Reintroduce Bill To Break Up XXL-Sized Banks

Posted by Orb Staff on April 10, 2013 No Comments
Categories : Residential Mortgage

13628_too_much_money Legislators Reintroduce Bill To Break Up XXL-Sized Banks Rep. Brad Sherman, D-Calif., and Sen. Bernie Sanders, I-Vt., have reintroduced the ‘Too Big to Fail, Too Big to Exist Act’ in the House and Senate, respectively.

Under the legislation, any institution that is too big to fail will be broken up and reorganized to avoid more government bailouts and future risk to the economy. If passed, this legislation would require the Secretary of the Treasury to identify and then break up institutions that are deemed too big to fail.

‘No longer should giant financial institutions be able to get low-cost funds by telling large depositories that even if the institution is mismanaged and faces financial default, by virtue of its sheer size, it will be able to obtain a bailout from the federal government,’ says Sherman. ‘Every financial institution should compete for funds based on the soundness of its balance sheet, and no financial institution should be able to claim that there is a special federal safety net available to its investors because of the institution's sheer size.’

Sanders notes that the six largest U.S. financial institutions have assets of nearly $9.6 trillion, issue more than two-thirds of all credit cards, hold more than 40% of all U.S. bank deposits and originate over half of the nation's mortgages.

‘In my view, no single financial institution should have holdings so extensive that its failure could send the world economy into crisis,’ says Sanders. ‘At the very least, no institution, no CEO in America should be above the law. If an institution is too big to fail, it is too big to exist.’

Sanders adds that U.S. Attorney General Eric Holder says the U.S. Department of Justice may not pursue criminal cases against big banks because filing charges could ‘have a negative impact on the national economy, perhaps even the world economy.’

‘We have a situation now where Wall Street banks are not only too big to fail, they are too big to jail,’ Sanders says. ‘That is unacceptable and that has got to change because America is based on a system of law and justice.’

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