I wasn’t here on Friday to point this out, and it seemed to get lost in the news shuffle anyway, but a bill was introduced in the Senate that would tackle Too Big To Fail. And by tackle, I don’t mean in the wishy-washy Treasury Department way. It would actually break up the banks.
Independent Senator Bernie Sanders of Vermont introduced what he calls the “Too Big to Fail, Too Big to Exist Act.” From the bill:
Notwithstanding any other provision of law, beginning 1 year after the date of enactment of this Act, the Secretary of the Treasury shall break up entities included on the Too Big To Fail List, so that their failure would no longer cause a catastrophic effect on the United States or global economy without a taxpayer bailout.
As opposed to the health care bill, which is 1,990 pages, Sanders’ bill is two pages. The Barney Frank/Treasury plan to address TBTF is 253 pages long. Instead of breaking up the banks, it would allow regulators to shut them down if they seemed a threat to the economy.
Here’s Sanders’ video explanation of why his way is better:
I don’t know that Sanders’ bill has much of a chance, but at least it’s in the system. The Big Picture blog has this assessment:
Larger banks are expected lobby aggressively against it — but mid-sized and smaller financial institutions might be supportive. The bailouts have created an oligopoly, which makes it challenging for the smaller banks to market themselves.
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