Break Up Big Banks
The number of U.S. banks has fallen to 6,891, the least since 1934 when the Federal Deposit Insurance Corp. – created in the wake of the Great Depression – began keeping track. The decline is from a peak of more than 18,000, according to a Wall Street Journal article published on Tuesday. The acceleration of the unwelcome trend was predicted as long ago as 1999 by then Rep. Bernie Sanders. The House that summer was considering a bill to allow commercial banks, investment banks and insurance companies to merge by repealing the Glass-Steagall Act. Sanders predicted that such a massive deregulation of the financial services industry would lead to fewer banks and financial service providers; increased charges and fees for individual consumers and small businesses; diminished credit for rural America and taxpayer exposure to potential losses should a financial conglomerate fail. “It will lead to more mega-mergers; a small number of corporations dominating the financial service industry; and further concentration of economic power in our country,” Sanders said. Nevertheless, the bill passed.
Then came the Wall Street financial collapse of 2008 followed by a $16 trillion Fed bailout on top of a $700 billion bailout approved by members of Congress who believed that the handful of major banks so dominated the U.S. economy that they were too big to fail. Today, there are even fewer big banks dominating even more of the U.S. economy, a point Sanders has made in the Senate, where he introduced legislation to break up the largest financial institutions.
“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,” he wrote in a column for The Huffington Post.
