Posts Tagged ‘big banks’

Too Big To Fail Failed In The Senate 61-33



Well, there can no longer be any doubts that the Senate is firmly in the pockets of the big banks. Once again, they’ve proven completely unwilling to do what good governance and the lessons of history suggest they must.

Today an amendment to the financial reform bill, sponsored by Senators Sherrod Brown of Ohio and Ted Kaufman of Delaware that would have required the big banks to be broken down into smaller and more manageable institutions failed by a vote of 61 to 33.

Not that I really thought ending “too big to fail” had a chance, but I thought the vote would be narrower than that. There are way too many senators who are responding to the wishes of their campaign donors and not to the needs of their constituents.

Too Big To Fail? Too Big To Exist!


Some facts to ponder from Senator Sanders’ remarks:

  • The four largest banks issue two-thirds of United States credit cards
  • The four largest banks make half of all U.S. mortgages
  • The four largest banks hold forty percent of bank deposits and $7.4 trillion dollars in assets.

In the late 19th and early 20th centuries, our government passed the Sherman and Clayton Acts, which were aimed at ensuring a competitive environment in which the free market can operate. Standard Oil, which at one point, controlled 91% of production and 85% of final sales of oil, was broken up because it was too big.  More recently, AT&T was forced as part of a legal settlement, to break up into smaller companies. It held a sanctioned monopoly over telephone service for many years.

Over the past thirty years, our anti-trust laws have been largely ignored. If there was ever a time when they need to be dusted off and put into action again it is now. The banks control too much of the United States and their folly has hurt not only the U.S. economy , but the global economy as well.

What do you think? Is it time to break up the banks?

Really, Big Banks? Really?



Even before the ink was dried on President Obama’s signature on the credit card reform bill, the banks were already on the hunt for loopholes in the law to exploit in the name of profit.  In the absence of loopholes, they wanted to find new ways to generate the same amount of profit as they had before the law took effect.

An article on, which is a subsidiary of the Wall Street Journal and certainly no friend of Main Street,  predicted that banks would stop offering free checking accounts.  Probably the single most laughable comment in the entire piece is this shining gem:

Already cash-strapped banks anticipate declining revenue from credit cards as rules from the CARD Act take effect, says Hank Israel, director of Novantas, a financial services consulting firm in New York.

If the banks are so cash-strapped, then how can they afford to give their top executives such large bonuses? It is true that the new law will cost the banks revenue, and recent action by the Federal Reserve to limit overdraft fees starting this summer will cut those profits even further. Let’s be clear here: the new law won’t bankrupt the banks…not even close! The banks will still bring in revenue, and plenty of it. It just won’t be quite as much.

That said, those profits that the banks are trying to reclaim can be fairly characterized  as “ill-gotten,” and complaining about their curtailment is a bit like a bank robber complaining that he can’t rob any more banks after he is caught. Further, finding new ways to make the same sorts of profits is akin to that bank robber switching to robbing armored trucks.

“The banks need to make up the lost profits due to the law in other ways,”  whine bank cheerleaders and apologists, with the inference being that but for passage of the law, the banks would not resort to such tactics.

Don’t get me wrong: there is nothing wrong with making money. There’s nothing wrong with making a lot of money. The wrong lies in how that money is made. It is just as wrong for banks to make 80% of their revenue from 20% of their most vulnerable customers as it is for someone to make his money by thievery.

Instead of whining about being regulated after years of massive deregulation that precipitated the financial crisis in which we now find ourselves, the banks should be looking at new ways to make money that add value.  No one would complain about paying for  a service that is helpful and actually does something.

Tennessee Republican Now Against Financial Reform


monoploly The Republican senator from the state of Tennessee won’t support the current financial reform bill authored by Democratic senator Chris Dodd because he says it would give consumers too much protection.

His sticking point is the proposed Consumer Financial Protection Agency (CFPA) that has been proposed by financial experts like Elizabeth Warren. Even though there have already been compromises made on the agency, such as locating it within the Federal Reserve instead of it being a completely separate and independent entity, Senator Corker still believes it will have too much power.

He said of the agency :

You can have them making rules and enforcing things that undermine the safety and soundness, for instance, forcing an institution in the pursuit of social justice for instance – I’m just making up something – to make loans to people that have no ability to pay it back.

Obviously, the good Senator Corker is one of those who believe that consumers borrowing more than they could afford to pay back was the sole cause of the collapse. Conveniently, he leaves out Wall Street who created mortgage securitization in the first place in order to take advantage of extremely low interest rates. He neglects to mention the banks who rapaciously demanded more and more mortgages to sell to Wall Street, and the mortgage brokers that convinced families that they could afford $400, 000 dollar homes on meager salaries. The details are beyond the scope of this article, but let’s just say that the financial collapse wasn’t only due to people borrowing more money than they could afford to pay back.

The bottom line is that Republicans don’t want the CFPA at all. In fact, they would like nothing better than to stamp out all financial reform because the banking industry doesn’t like it. An agency that exists only to protect the American people from the predations of Wall Street and the big banks? No, that’s too much protection!

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