Sen. Bernard Sanders is bringing his campaign to break up the big banks to a town meeting in Burlington later this week. It’s all part of an effort to publicize a bill he plans to introduce aimed at ending the regime of “too-big-to-fail” banks.
Since the financial collapse of 2008, the biggest banks have gotten even bigger, leading Attorney General Eric Holder to acknowledge that the Justice Department has been reluctant to pursue criminal cases against some banks and bankers because, in effect, they have become too big to jail.
Ever since the advent of the financial meltdown the Obama administration has proceeded with caution against the biggest banks. Above all, President Obama was concerned about economic stability. He feared that challenging the big banks too directly, either by breaking them up or by pursuing criminal charges against their leaders, would threaten the stability of the banks and of the entire economy.
And yet the crisis itself was engendered by the decisions of policymakers eager to give the banks what they want. After 1999, when Congress repealed the Glass-Steagall Act of 1933, the big banks were free to merge their commercial and investment banking activities, leading to the ballooning size of the big banks and the destructive lending that created the meltdown.