There is growing support for the idea of dealing with the problem of gigantic financial institutions deemed too big to fail by breaking them up before they threaten the economy once again. In the wake of the financial meltdown that caused the worst recession since the 1930, taxpayers put  $23.7 trillion at risk to stabilize the financial system, according to the special inspector general for the Troubled Asset Relief Program.  To reduce the risks of even bigger bailouts to save even bigger banks, Senator Bernie Sanders and Representative Maurice Hinchey have proposed legislation to break up banks considered too big to fail. The Los Angeles Times reported on Wednesday that “there is growing momentum in Congress to cut those firms down to size before they start teetering to limit the damage if they do collapse.”

In an op-ed, Sanders and Hinchey note that since the beginning of the financial crisis, three of the largest “too-big-to-fail” institutions have become even bigger.

“In other words,” they wrote, “if any of these financial institutions were to fail again the taxpayers would be on the hook for another bailout, perhaps even larger than the last one,” they wrote. “It is not just a question of the ongoing threat these firms pose to taxpayers if they get into trouble again. The enormous concentration of ownership within the financial sector also is damaging the economy by limiting choices and raising prices for consumers and small businesses.

“Today, just four huge financial institutions hold half the mortgages in America, issue nearly two-thirds of our credit cards and control about 40 percent of all bank deposits in this country. Adding insult to injury, just five financial institutions hold 95 percent of the $290 trillion in derivatives at commercial banks — side bets made by Wall Street gamblers that brought the entire economy to the brink of despair.

“As banks get bigger, consumers are paying twice — first as taxpayers called on to bail out the financial behemoths and a second time as consumers forced to pay higher fees and interest rates on credit cards and other financial products.

“At the dawn of the 20th century, Presidents Teddy Roosevelt and William Howard Taft took a big stick to the largest and most powerful corporate interests of their era. Today, it is time to take a page out of the book of these courageous Republicans and break up financial institutions and insurance giants that have become too big to fail.

To read the entire column, click here.

To read the LA Times article, click here.