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FOR IMMEDIATE RELEASE
CONTACT: Senator Bernie Sanders
Michael Briggs (202) 228-6492
Sanders, Sherman Propose Legislation to Break Up Big Banks
WASHINGTON - April 9 -
Sen. Bernie Sanders (I-Vt.) today introduced legislation to break up banks that have grown so big that the Justice Department fears the financial system would be put at risk if criminal charges were filed. Rep. Brad Sherman (D-Calif.) proposed a companion bill in the House.
The 10 largest banks in the United States are bigger now than before a taxpayer bailout following the 2008 financial crisis when the Federal Reserve propped up financial institutions with $16 trillion in near zero-interest loans and Congress approved a $700 billion rescue for banks that some considered “too big to fail.” 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.”
“We have a situation now where Wall Street banks are not only too big to fail, they are too big to jail,” Sanders said. “That is unacceptable and that has got to change because America is based on a system of law and justice.”
“Never again should a financial institution be able to demand a federal bailout,” Sherman said. “They claim; ‘if we go down, the economy is going down with us,’ but by breaking up these institutions long before they face a crisis, we ensure a healthy financial system where medium sized institutions can compete in the free market.”
The Sanders and Sherman legislation would give the Treasury Department 90 days to identify commercial banks, investment banks, hedge funds and insurance companies whose “failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.”
The list would have to include institutions deemed “systemically important banks” by the Financial Stability Board, the G-20 body that monitors and makes recommendations about the global financial system. The board in a press release last Nov. 4 identified eight U.S. banks required to maintain extra capital buffers: Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo. Treasury would be required to break up those and any other institutions identified by the secretary as too big to fail.
The six largest U.S. financial institutions 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.
“In my view,” Sanders concluded, “no single financial institution should have holdings so extensive that its failure could send the world economy into crisis. At the very least, no institution, no CEO in America should be above the law. If an institution is too big to fail, it is too big to exist.”
To read the bill, click here.