Sanders Bill Would Break Up Banks ‘Too Big to Fail’

For Immediate Release

US Senator Bernie Sanders
Contact: 

Michael Briggs or Will Wiquist (202) 224-5141

Sanders Bill Would Break Up Banks ‘Too Big to Fail’

WASHINGTON - Sen. Bernie Sanders (I-Vt.) introduced legislation that
would make the Treasury Department identify and break up financial
institutions that are "too big to fail."  

"If
an institution is too big to fail, it is too big to exist," Sanders
said. "We should break them up so they are no longer in a position to
bring down the entire economy. We should end the concentration of ownership that
has resulted in just four huge financial institutions holding half the
mortgages in America, controlling two-thirds of the credit cards, and
amassing 40 percent of all deposits."

Sanders'
legislation would
give Treasury Secretary Timothy F. Geithner 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.

The
perilous condition of financial institutions deemed too big to fail played a
major role last year in undermining the American economy and driving the country
into a severe recession. As Wall Street cratered, taxpayers were put on the
hook for a $700 billion bank bailout. Teetering banks also were propped up by
at least $2 trillion more from the Federal Reserve in secret loans at
virtually no interest.

Since
the bailouts and the resulting shakeout on Wall Street, the four largest
banks in America (JP Morgan Chase, Bank of America, Wells Fargo, and
Citigroup) now have strengthened their domination of the home mortgage and
credit care industries. Just five American banks (JP Morgan Chase, Bank of
America, Citigroup, Goldman Sachs, and Morgan Stanley) own a staggering 95
percent of the $290 trillion in risky derivatives held at commercial banks. (Derivatives
are the risky side bets made by Wall Street gamblers that led to the $182
billion bailout of AIG, the $29 billion bailout that allowed JP Morgan Chase
to acquire Bear Stearns, and forced the collapse of Lehman Brothers.)

One
result of the burgeoning concentration of ownership has been outrageously
high bank fees and interest rates for credit cards, mortgages and other
financial products.

"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 just tremendous damage to our economy." 

To
watch the weekly Web video "Senator Sanders Unfiltered," click here.

###

Share This Article

More in: