The recent kerfuffle about Bernie Sanders purportedly not knowing how to bust up the big banks says far more about the threat Sanders poses to the Democratic establishment and its Wall Street wing than it does about the candidate himself.
Of course, Sanders knows how to bust up the big banks. He’s already introduced legislation to do just that. And even without new legislation, a president has the power under the Dodd-Frank reform act to initiate such a breakup.
But Sanders threatens the Democratic establishment and Wall Street, not least because he’s intent on doing exactly what he says he’ll do: breaking up the biggest banks.
The biggest are far larger today than they were in 2008, when they were deemed “too big to fail.” Then, the five largest held around 30 percent of all U.S. banking assets. Today, they have 44 percent.
According to a recent analysis by Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, the assets of just four giant banks—JPMorgan Chase, Citibank, Bank of America and Wells Fargo—amount to 97 percent of our the nation’s entire gross domestic product in 2012.
Which means they’re now way too big to fail. The danger to the economy isn’t just their indebtedness. It’s their dominance over the entire financial and economic system.