A jaw-dropping admission about mega-banks, uttered last week by our Attorney General, has been somewhat under-reported, considering the role big banks played in the bone-crushing financial crisis of 2008, a crisis for which millions of Americans are still paying a price:
But I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large.
…I think it has an inhibiting influence, impact on our ability to bring resolutions that I think would be more appropriate.
Fortunately, liberal Democratic Senator Elizabeth Warren (damn, that still feels good to write), is watching:
It has been almost five years since the financial crisis, but the big banks are still too big to fail. That means they are subsidized by about $83 billion a year by American taxpayers and are still not being held fully accountable for breaking the law. Attorney General Holder’s testimony that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail.
Warren, champion of the 99 percent, also had something to say about the government’s December, 2012, settlement with HSBC—the gimongous British bank that was laundering money for drug-dealing thugs in Mexico and Columbia and elsewhere—in which the banksters are required to pay nearly $2 billion (which is only a little over a month’s worth of profits) in order to avoid criminal charges:
If you’re caught with an ounce of cocaine, the chances are good you’ll go to jail. If you’re caught repeatedly, you can go to jail for life. Evidently, if you launder nearly $1 billion for drug cartels and violate our government’s sanctions, your company pays a fine and you go home and sleep in your own bed at night. I think that’s fundamentally wrong.
Another liberal legislator, Senator Sherrod Brown of Ohio, is trying to lead a bipartisan effort—right-wing Senator David Vitter is on board—“to break up the taxpayer-funded party on Wall Street” by breaking up the big banks.
Who knows, maybe there is enough outrage out there to get something done, but don’t hold your breath. Senator Brown tried but failed to get a break-up-the-big-banks amendment added to the Dodd-Frank Wall Street Reform law, passed way back in, uh, 2010.
For more on what Senator Brown thinks about the big banks and how to do away with the absurdity of too-big-to-fail, go here. To at least do something to show support for breaking up these banks, here is a petition you can sign. Here is another one.
Below are two video segments featuring the very liberal Sen. Brown and the very conservative Sen. Vitter, explaining the problem and their plans to address it. If you are one of those hankering for bipartisanship in Congress, if you are one of those who long to see an intersection of ideological interests between liberals and conservatives, this is your issue. No, this is our issue.
Sadly, only a few hundred folks have watched these video segments posted on YouTube, which is, of course, how the banksters are able to get away with this stuff.
Get educated, then get outraged, then get active:
The Erstwhile Conservative: A Blog of Repentance 
Jim Hightjdhight01
/ March 11, 2013I have sent letters, emails, and called our Congressional representative and both Senators about this matter. I received form letters from all three stating that it was a problem but difficult to solve. This is total BS. If “corporations are people,” then they should be required to follow the laws of this country. If HSBC can get away with complicity with drug dealers, shouldn’t every person convicted of drug trafficking get a new trial? That might be stretching it, but the bank was guilty of the same crime.
It is time for these “too big to fail” banks to either be prosecuted or made smaller. In my opinion, the money given to politicians contribute to their “too big to fail” status. Until citizens united is overturned, big money is taken out of politics, and public funding of elections is established, the big banks, the most evil Koch brothers, and other wealthy, greedy individuals and corporate interests will be above the law.
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R. Duane Graham
/ March 12, 2013Jim,
Snator Al Franken started a petition for a constitutional amendment to get rid of Citizens United.
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LisaF
/ March 11, 2013I am so tired of injustice. We subsidize these banks that offshore their profits and throw disabled veterans in the street over their mistake.
http://occupyamerica.crooksandliars.com/diane-sweet/wells-fargo-bills-disabled-veteran
Take you money out of the big banks. I use a credit union and a small local bank for my mortgage.We must become active participants in our very weak democracy,
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R. Duane Graham
/ March 12, 2013Lisa,
Thanks for linking to that heart-rending story. It is very hard to digest. It is totally unacceptable. It makes me very mad. I wish I believed in hell so I could imagine that these people will have a place to live when they are done screwing up people’s lives here on earth.
Duane
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ansonburlingame
/ March 11, 2013Duane,
OK, I agree that the size of some banks is a problem in America today and something needs to be done about it. Using your pithy title, “I am pissed about big banks”.
But then the problem gets difficult. Just how big are some banks and what exactly is too big. I did not like the comparison used in the video presentation, for example. Comparing the wealth of a given bank to GDP is comparing apples and oranges. Wealth is the total value of everything owned by a person or institution, the buildings, the money on deposit but just “sitting there”, etc. GDP on the other hand is a measure of national earnings, money earned by producing and selling goods and services.
If I have a stock portfolio worth $10,000 and it simply “sits there” rising and falling in value based on the price of stocks, that is wealth but not earnings. But if I get paid $10,000 selling things, well that contributes to GDP. So to be accruate in measuring the size of a bank the wealth of the bank should be compared to the total wealth in America, some $65 Trillion last year based on one of your previous blogs, not GDP at $15 or so Trillion.
But whatever the size comparison might be, an accurate one, I suspect many banks are too big to fail without huge consequences on our economy. Thus something should be done about it.
Well if something is financially too big, the obvious solution is to take some of the finances away from it. Take money OUT of or away from some banks becomes the solution.
OK, how does society go about doing exactly that, take money, legally earned, out of a bank and do not “reward” the bank or pay for the money so taken?
As well if you take money away from an instituion without reimbursment, where do you then put the money? You have for sure “robbed” Peter, but who exactly is the “Paul” to benefit from that transaction?
Chaves and others solved that problem. They nationalized institutions, previously private institutions and provided the money “to the people”. Hmmmm?
I have used BOA for about 20 years as my bank of choice. But BOA is too big to fail and thus money should be taken away from BOA, right? Hmmmm? And who gets that money, Commmerce Bank in Joplin maybe, a “little bank”? Well BOA for whatever reason is TRYING to downsize a little it seems, without government force. Arvest Bank has bought them out, locally. Seems like you would applaud that transaction between BOA and Arvest Bank.
But anyway, it seems like we agree on the problem but don’t yet have any proposed solutions upon which to agree, yet. Neither does Congress, either.
But I do KNOW this point, the lead in to your blog. A GOPer (Grassley) was complaining about “too big to Jail” and asking the AG why that happens. I did not hear a satisfactory answer however from the AG.
The DOJ’s job is to enforce the law, apolitically. Yes, it can for sure recommend to Congress new laws to enable it, the DOJ to do “better” as well, but enforcing the law through courts, apolitically, I HOPE you agree is its first priority, politics be damned.
If an individual or institution breaks the law it is the job of DOJ to prosecute that individual or instituion. If such prosecution makes for tough political sleding, well so what?
If HBSC broke a law by laundering money then slam dunk that institution legally and apolitically, period. If that causes the economy to toss and turn, well other Executive Departments and Congress will simply have to deal with it, in my view.
The two linked videos were on the mark, in my view, stating the problem. But I still await solutions, effective and legal ones and constitutional as well!!! And of course the size of the problem should dictate the type of solutions offered. Government in time of war can ration and control almost anything. Are we now confronted with a war on Banks?
Anson
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R. Duane Graham
/ March 12, 2013Breaking up the banks is the solution, Anson. Or don’t you think the government has the power to break them up?
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hlgaskins
/ March 11, 2013“Too big to fail” should be our first clue that our antitrust laws need to be reviewed and revised to allow for breaking up our “too big to fail” banking institutions.
Click to access 111-33_48102.PDF
“But then the problem gets difficult. Just how big are some banks and what exactly is too big.”
I believe this was answered above but here’s my spin. When a bank becomes so big that its collapse stands to throw the country, and perhaps the world, into an economic recession such that it requires a government bailout to survive, is in my view too big.
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R. Duane Graham
/ March 12, 2013That is essentially what Sherrod Brown was saying, HLG, although he quantified it.
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writer89
/ March 11, 2013Vitter thinks TR was a typical Republican? He wouldn’t make it past a primary in today’s party. But what the hell, if he wants to convince himself that Republicans really support breaking up the banks, fine with me. But first he ought to read Anson’s very clever explanation of why it’s not possible to do it because you can’t take money away from people that they’ve “legally” EARNED! Wha-whaaa!
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R. Duane Graham
/ March 12, 2013TR could not be a Republican these days largely because of people like Vitter.
And you are so right about Anson’s “explanation.”
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ansonburlingame
/ March 12, 2013Sorry HLG,
But I had a hard time staying awake to read a 2009 Congressional hearing. But I did scan it and found nothing “new” for today’s concerns some 4 years after the hearing was held. It read, to me at least, as a build up to argue for Dodd-Frank.
I have yet to really take a position on that attempt by the federal government to regulate, further, our banks. Obviously it has yet to tame the growth of big banks, a problem that I acknowledge in general, but remain skeptical of solutions.
Here is an example of why I remain suspicious. Today’s Globe published a column by George Will in which he wrote (in part):
“Government is failing spectacularly at its core functions, such as budgeting and educating.” Yet it continues to mulitiply its peripheral and esocteric responsibilities, tasks that require it to do things for which it has no aptitude………..”
Individuals in government, some of whom are actually brillant, compassionate, etc., can create great ideas to more effectively govern all Americans (not just some Americans). But inevitably such brilliant ideas must be enforced or executed by a massive, 2 million people, bureaucracy. That is where many things simply get “gummed up” and common sense does not prevail, period. Enactment of laws becomes a massive “group think” execution.
Note the column originated by a school suspending a 7 year old eating a Pop Tart, thinking it looked like a gun and saying, out loud, Bang, Bang!!!!
I have observed the effects of nationalization of institutions by some countries and the results usually are disasterous. I also don’t accuse folks in here of promoting nationalization of big banks, or any banks for that matter. What we are seeking now is some threshold beyond which any bank cannot grow and I have no idea what that threshold might be, today or tomorrow.
I suppose a “big bank” would have been one with $1 Million in “wealth” long ago. Well what is that number today? Is it a percent of GDP, national wealth (however that number might be determined) or something else. As well, once a bank reaches that level what does it say to a customer, “Nope, you cannot deposit your pay check in this bank, now.”?
I DO “sense” this however. It seems that when “investment banks”, actually stock brokers, merged with “normal banks” things got very big, very fast. Maybe that is a “threshold” that should be reexamined. Long ago I had a “bank account” (with a normal bank) and a “brokerage account” (with Merril Lynch). They were separate and distinct accounts. I viewed them as my “have to have account” (to live on) and my “growth account” (to take risks and rely on investment growth). If I “lost it all” in my brokerage account, well I would still survive. But if the “bank account” went down to zero, well I would be in DAILY trouble, financially. One goes down and I cannot buy a new car. If the other fails however, I could not “buy groceries” or pay my mortgage.
Today it seems all that money is mixed together and thus “too big to fail”.
Anson
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R. Duane Graham
/ March 12, 2013Anson,
Your argument here and above seems to be that since you can’t figure out how to downsize banks whose size threatens the well-being of the country, then those banks should continue to threaten the well-being of the country.
Duane
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ansonburlingame
/ March 12, 2013Not at all Duane and you should know better. (I wanted to add something else but will refrain).
I AGREE with the problem. I just don’t have a remedy for it, yet. But if you have something other than ridicule for my motivations, I will at least read it and not ignore you !!!
I also wanted to “cuss” again but refrain, again, from doing so!!!
Anson
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Jane Reaction
/ March 12, 2013Jane thinks that Anson should get a new hobby, perhaps some connect-the-dots activity books.
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