WASHINGTON, April 22 – Sen. Bernie Sanders (I-Vt.) said a vote today in the Senate Budget Committee showed the potential for legislation to break up financial institutions considered “too big to fail.”
In a strong signal of the growing momentum behind proposals to dismantle financial institutions that dominate the U.S. economy, the budget panel narrowly voted 12 to 10 against Sanders’ amendment.
“While we didn’t quite win today’s vote, we took a major step forward in showing there is a great deal of support for breaking up huge financial institutions,” Sanders said. “We must break up these behemoths not only because they are a burden on taxpayers but because of the incredible economic power they exert on the economy through their monopolistic practices. The enormous concentration of ownership in the financial sector has led to higher bank fees, usurious interest rates on credit cards, and fewer choices for consumers.”
Sanders said the four major U.S. banks – Bank of America, Citigroup, JPMorgan Chase and Well Fargo – issue two-thirds of the credit cards in the country, write half the mortgages and collectively hold $7.4 trillion in assets, about 52 percent of the nation’s estimated total output last year.
“Incredibly, despite all of them being bailed out during the Wall Street meltdown because they were ‘too big to fail,’ three of them are now bigger than before the bailout,” Sanders said. Since the 2008 taxpayer bailout of big banks, Wells Fargo has grown 43 percent bigger; JP Morgan Chase has grown 51 percent bigger; and Bank of America is now 138 percent bigger than before the financial crisis began.
Sanders said there is a wide and growing spectrum of support for breaking up big banks. Three Federal Reserve bank presidents – James Bullard, president and chief executive of the Federal Reserve Bank of St. Louis’ Kansas City Fed President Thomas M. Hoenig, and Dallas Fed President Richard W. Fisher – all support breaking up too-big-to-fail banks.
Hoenig said, "I think they should be broken up. I think there's no reason why as we've done in other instances of finding the right mechanism to break them into their components.” Fisher said the costs of too-big-to-fail financial institutions dwarf their purported benefits. “The risk posed by coddling too big to fail banks is simply too great.”
Sanders introduced a bill last Nov. 5 to make the treasury secretary identify and break up within one year financial institutions whose collapse could bring down the entire economy. An amendment to break up big banks is expected to be offered when the Senate takes up financial reform legislation next week.