San­ders Bill Would Break Up Big Banks

Cites Jus­tice Dept. Wor­ries that Banks are ‘Too Big to Jail’

Stanstead Journal - - NEWS - Burli­ing­ton, VT

U.S. Sen. Bernie San­ders (I-Vt.) said he will in­tro­duce leg­is­la­tion to break up banks that have grown so big that the Jus­tice De­part­ment has not pur­sued pros­e­cu­tions for fear an in­dict­ment would harm the fi­nan­cial sys­tem.

The 10 largest banks in the United States are big­ger now than be­fore a tax­payer bailout fol­low­ing the 2008 fi­nan­cial cri­sis. At the time Congress, over

San­ders’ ob­jec­tion, ap­proved a $700 bil­lion bank res­cue be­cause of con­cerns by some that the fi­nan­cial in­sti­tu­tions were too big to fail. An­other $16 tril­lion from the Fed­eral Re­serve propped up fi­nan­cial in­sti­tu­tions.

At­tor­ney Gen­eral Eric H. Holder Jr. now says the Jus­tice De­part­ment may not pur­sue crim­i­nal cases against big banks be­cause fil­ing charges could “have a neg­a­tive im­pact on the na­tional econ­omy, per­haps even the world econ­omy.”

“In other words,” San­ders said, “we have a sit­u­a­tion now where Wall Street banks are not only too big to fail, they are too big to jail. That is un­ac­cept­able and that has got to change be­cause Amer­ica is based on a sys­tem of law and jus­tice.”

U.S. banks have be­come so big that the six largest fi­nan­cial in­sti­tu­tions in this coun­try (J.P. Mor­gan Chase, Bank of Amer­ica, Cit­i­group, Wells Fargo, Gold­man Sachs, and Mor­gan Stan­ley) to­day have as­sets of nearly $9.6 tril­lion, a fig­ure equal to about two-thirds of the na­tion’s gross domestic prod­uct. Th­ese six fi­nan­cial in­sti­tu­tions is­sue more than two-thirds of all credit cards, over half of all mort­gages, con­trol 95 per­cent of all de­riv­a­tives held in fi­nan­cial in­sti­tu­tions and hold more than 40 per­cent of all bank de­posits in the United States.

San­ders’ leg­is­la­tion would give Trea­sury Sec­re­tary Ja­cob Lew 90 days to com­pile a list of com­mer­cial banks, in­vest­ment banks, hedge funds and in­surance com­pa­nies that he deems too big to fail. The af­fected fi­nan­cial in­sti­tu­tions would in­clude “any en­tity that has grown so large that its fail­ure would have a cat­a­strophic ef­fect on the sta­bil­ity of ei­ther the fi­nan­cial sys­tem or the United States econ­omy with­out sub­stan­tial government as­sis­tance.”

Within one year af­ter the leg­is­la­tion be­came law, the Trea­sury De­part­ment would be re­quired to break up those banks, in­surance com­pa­nies and other fi­nan­cial in­sti­tu­tions iden­ti­fied by the sec­re­tary.

“If an in­sti­tu­tion is too big to fail, it is too big to ex­ist,” San­ders said. “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,” San­ders said. “We need to break up th­ese in­sti­tu­tions be­cause they have done of the tremen­dous dam­age they have done to our econ­omy.”

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