Independent Vermont senator Bernie Sanders recently proposed legislation to break up financial institutions that U.S. Attorney General Eric Holder deems “too big to fail.”
“Laws should apply to Wall Street as well as everybody else,” Sanders wrote in a Huffington Post piece. “So I was stunned when our country’s top law enforcement official recently suggested it might be difficult to prosecute financial institutions that commit crimes because it may destabilize the financial system of our country and the world.
“The attorney general’s view seems to be that if you are just a regular person and you commit a crime, you go to jail. But if you are the head of a Wall Street company, your power is so great that a prosecution could have destabilizing consequences with national or even worldwide implications,” continues Sanders. “We have a situation now where Wall Street banks are not only too big to fail, they are too big to jail. That view is unacceptable.”
Sanders’ bill, which has drawn support from Bay State Senator Elizabeth Warren, would give Treasury Secretary Jack Lew 90 days to compile a list of insurance companies, hedge funds, commercial and investment banks, and other financial institutions he determines are too big to fail. The Treasury Department would then have a year to break up these institutions into smaller, manageable conglomerates.
Senator Warren notes that big banks like Goldman Sachs, Bank of America, and JP Morgan Chase have actually gotten bigger since the 2008 bailout, and that this creates a kind of “insurance policy” for financial institutions that are treated as safer investments when declared “too big to fail” by the government, effectively helping the big banks at the expense of smaller banks.
But some supporters of Wall Street regulation say the proposed legislation won’t do enough to fix the problem. “Dodd-Frank already tried to do [this], and we’re going on three years and we still haven’t compiled that list, thanks to the FDIC [Federal Deposit Insurance Corporation], and the Federal Reserve, and some other agencies,” notes RT Network News producer Bob English. “The big banks are still getting a pass.”