With Wall Street banks as big and profitable as ever ten years after their reckless criminality sparked the worst financial crisis since the Great Depression, Sen. Bernie Sanders (I-Vt.) introduced legislation on Wednesday that would break up Goldman Sachs, JPMorgan Chase, Citigroup, and other so-called "too big to fail" financial institutions that pose a major systemic risk to the American economy.
"No financial institution should be so large that its failure would cause catastrophic risk to millions of Americans or to our nation's economic well being."
—Sen. Bernie Sanders
"No financial institution should be so large that its failure would cause catastrophic risk to millions of Americans or to our nation's economic well being," Sanders said in a statement. "We must end, once and for all, the scheme that is nothing more than a free insurance policy for Wall Street: the policy of 'too big to fail.'"
Titled "The Too Big to Fail, Too Big to Exist Act," Sanders' legislation would break up any bank that has a total exposure of more than three percent of the nation's gross domestic product (GDP)—the equivalent to $584.5 billion in today's dollars.
If passed, Sanders' bill would break up of America's six largest financial institutions—JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley—as well as massive non-bank financial corporations like AIG and Prudential.
"These six major financial institutions have over $10 trillion in assets, equivalent to 54 percent of our entire GDP and have a combined total exposure that exceeds 68 percent of our nation's GDP," according to a summary of the new legislation released by Sanders' office.
The 4 largest banks in this country (JP Morgan Chase, Citigroup, Bank of America, and Wells Fargo) are on average 80% larger today than they were before we bailed them out.
If these banks were too big to fail 10 years ago, what would happen if any of them were to fail today?
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— Bernie Sanders (@SenSanders) October 3, 2018
In a Facebook Live video on Wednesday, Sanders discussed the details of the new legislation with Rep. Brad Sherman (D-Calif.)—who is planning to introduce a companion bill in the House—and economist Simon Johnson, who joined a large group of financial experts, consumer advocacy groups, and labor unions in endorsing the Vermont senator's bill:
"The new Too Big to Fail, Too Big to Exist proposed legislation from Senator Bernie Sanders is short and to the point," Johnson said in a statement on Wednesday. "The largest banks and other highly leveraged financial institutions are simply too big—and pose a real danger to our continued economic recovery. Make them break up into smaller pieces, bringing more competition, better service and lower risks for the American economy."
“Too big to fail should be too big to exist," Rep. Sherman concluded. "Never again should a financial institution be able to demand a federal bailout."