Bernie Sanders To Introduce Bill To Break Up The Big Banks

[Luiz 4,253]

WASHINGTON, May 5 (Reuters) - Bernie Sanders, a self-described socialist U.S. senator who has launched a bid for the 2016 Democratic presidential nomination, said on Tuesday he will introduce a bill to break up the biggest banks, a position far to the left of the party's front runner, Hillary Clinton.

Calls for Wall Street's largest firms to be cut down were numerous after taxpayers spent billions of dollars to prevent the financial system from collapse during the 2007-09 financial crisis, but they have since gradually died down.

Sanders faces long odds against Clinton's fund-raising might, and his views might help position the former secretary of state and first lady more as a moderate and buttress her efforts to attract money from banks' deep pockets.

Under the Sanders proposal, regulators on the existing Financial Stability Oversight Council would compile a list of institutions that are 'too big to fail' and implicitly rely on government support during a crisis.

"If an institution is too big to fail, it is too big to exist," Sanders said in a statement.

Within a year of enactment of the bill, the Treasury secretary would be required to break up these firms. They would also be prohibited from using any customer funds for risky or speculative activities on financial markets.

Sanders, an independent from Vermont, launched his long-shot bid last week, highlighting his fight against authorizing the Iraq war, which Clinton voted to authorize as a senator, and putting pressure on her political agenda from the left.

Sanders is not alone in his view that large banks still pose an undue risk to the economy after causing the worst economic crisis since the Great Depression.

Senator Elizabeth Warren, a highly visible Democrat from Massachusetts, also wants to break up big banks. Among regulators, Tom Hoenig, second-in-command at the powerful Federal Deposit Insurance Corporation, wants the same thing.

Still, the bill stands a near-zero chance of becoming law. Representative Brad Sherman, a Democrat from California, also backed the bill, but it has no Republican support. Republicans hold the majority in both houses of Congress.

 

http://www.huffingtonpost.com/2015/05/05/bernie-sanders-banks_n_7217746.html?cps=gravity_3967_-4174660181237093328

[xoxo cupcakke 4,781]

Well, that's awesome of him but many Americans automatically associate socialist with communist and so the ignorance is not in his favor. How I love American miseducation

[Luc 4,776]

That is a really great idea. Banks shouldn't be bigger than 10% of GDP imo.

[Gagaloo911 12,959]

Go him, he's a truly great politician who's actually in it for the People.

 

I just wish he could grab the Dem ticket and win that scheisse  

[socotra 3,357]

A rarity in America... a legitimate, genuine politician. If every single Representative/Senator were like him, we might actually have a shot at a functional government. 

[Princess Die 1,864]

Is he serious though, is my question. Hasn't something similar been attempted before?

[Woolfsmck 2,763]

Actually, braking up the corporate monopolies to allow smaller companies a chance isn't a bad idea... Plus that would go a long way to income equality.  The owners of huge companies (wal mart,Hilton hotels, ect.) have way more assets than they can use and simply lock up vast amounts of wealth that the middle class and lower income brackets could certainly benefit from

[Economy 52,839]

Ummmm when it comes to banks, small banks tend to be mote likely to fail than latge banks actually. U just hear about it more

 

With small banks they are forced to compete more... Offer higher rates for savings accounts, lower rates for loans and they stretch themselves thin. Small banks are by many considered risky

 

Here in Canada None of the "Big 5" (5 biggest banks in Canada that make up 90% of financial system here) failed or required any bailout. On the otherhand a few small ones did fail

 

The financial sector is sensitive and many rules that apply to other sectors dont apply to the financial sector. You dont want TOO much competition and small vulnerable banks. Instead bigger but well regulated banks is best. I dont usually support lots of regulation but i do for the financial sector!  

[Luc 4,776]

Ummmm when it comes to banks, small banks tend to be mote likely to fail than latge banks actually. U just hear about it more

 

With small banks they are forced to compete more... Offer higher rates for savings accounts, lower rates for loans and they stretch themselves thin. Small banks are by many considered risky

 

Here in Canada None of the "Big 5" (5 biggest banks in Canada that make up 90% of financial system here) failed or required any bailout. On the otherhand a few small ones did fail

 

The financial sector is sensitive and many rules that apply to other sectors dont apply to the financial sector. You dont want TOO much competition and small vulnerable banks. Instead bigger but well regulated banks is best. I dont usually support lots of regulation but i do for the financial sector!  

But what if a bank does fail? If it's too big

In my country there's a bank with 80% of GDP and one with 70% of GDP and a few more... way too big. They know that taking large risks has basically no consequences. A big bank can't go bankrupt. A small bank can go bankrupt.

And really, people who have a bank account don't do that for the interest rate... they wabt a secure way to store money. 0.1% interest doesn't matter to them. Competition won't get much bigger. Actually, when it's impossible to grow past let's say 10% of GDP, most banks won't even have to compete with lower rates. They don't need to grow the amount of customers.

[Economy 52,839]

But what if a bank does fail? If it's too big

In my country there's a bank with 80% of GDP and one with 70% of GDP and a few more... way too big. They know that taking large risks has basically no consequences. A big bank can't go bankrupt. A small bank can go bankrupt.

And really, people who have a bank account don't do that for the interest rate... they wabt a secure way to store money. 0.1% interest doesn't matter to them. Competition won't get much bigger. Actually, when it's impossible to grow past let's say 10% of GDP, most banks won't even have to compete with lower rates. They don't need to grow the amount of customers.

Thats not true. I know quite a few people that made the tax free savings accounts on tangerine or other small banks that pay 2.5% interest or more while big banks are paying 1% (in line with central banks rate and thus more proper market rate)

 

Big banks if properly regulated rarely fail. U say they take big risks, well dont let them. As I said, the financial sector is sensitive, i support regulation of it...

 

If u have many smaller banks and they compete hard and stretch thenselves too thin, during a crisis u can actually get a whole wack of them fail, and when u combine it all together the damage can be just as bad

 

I would never trust putting my money in a small bank... EVER! Big banks are in fact safer... With the exeption of the 2008 crisis which was the most severe since 1929, big banks rarely fail... And Small ones failed in 2008 too anyway

 

And as i said its about proper regulation. Here in Canada none of the big banks fail cause regulation always required a higher amount in cash reserves than in the US in case of a meltdown in which they have to absorb losses

[Luc 4,776]

Thats not true. I know quite a few people that made the tax free savings accounts on tangerine or other small banks that pay 2.5% interest or more while big banks are paying 1% (in line with central banks rate and thus more proper market rate)

 

Big banks if properly regulated rarely fail. U say they take big risks, well dont let them. As I said, the financial sector is sensitive, i support regulation of it...

 

If u have many smaller banks and they compete hard and stretch thenselves too thin, during a crisis u can actually get a whole wack of them fail, and when u combine it all together the damage can be just as bad

 

I would never trust putting my money in a small bank... EVER! Big banks are in fact safer... With the exeption of the 2008 crisis which was the most severe since 1929, big banks rarely fail... And Small ones failed in 2008 too anyway

 

And as i said its about proper regulation. Here in Canada none of the big banks fail cause regulation always required a higher amount in cash reserves than in the US in case of a meltdown in which they have to absorb losses

Good regulation is necessary anyways, but it's not a guarantee against failure. Look at what happened in the US: people simply ran away from their mortgages. And European banks had shares and everything in American banks. And what about the great amount of banks that had Greek obligations? All aren't risky and would still happen with well-regulated banks. Banks should be kept small so they can fail. If you can't fail, it paves the way for immoral and risky behaviour.

[Economy 52,839]

Good regulation is necessary anyways, but it's not a guarantee against failure. Look at what happened in the US: people simply ran away from their mortgages. And European banks had shares and everything in American banks. And what about the great amount of banks that had Greek obligations? All aren't risky and would still happen with well-regulated banks. Banks should be kept small so they can fail. If you can't fail, it paves the way for immoral and risky behaviour.

The US was just a mess. First of all the Government encouraged bad loans when they decided to ensure more mortages of "people of modest means" and made banks more comfortable lending to people with riskier profiles

 

Secondly regulation was really poor. Capital requirements were really low, and people were allowed to just ditch their mortages. Here in Canada and in most Countries you cant do that. When u take out a loan ur legaly obligated to pay it back. Only if you declare bankruptcy u can stop ur loan. These were poor policies and US banks probably wouldnt fail as hard if it were not for them

 

Now your correct that theres no 100% garantee they wont fail eveb with regulation... But the odds are quite low... On the otherhand small banks fail more easily and if u have a whole wack of them, ull regularly have banks fail and ppl loosig assets over the . Not worth it in my opinion

[Luc 4,776]

The US was just a mess. First of all the Government encouraged bad loans when they decided to ensure more mortages of "people of modest means" and made banks more comfortable lending to people with riskier profiles

 

Secondly regulation was really poor. Capital requirements were really low, and people were allowed to just ditch their mortages. Here in Canada and in most Countries you cant do that. When u take out a loan ur legaly obligated to pay it back. Only if you declare bankruptcy u can stop ur loan. These were poor policies and US banks probably wouldnt fail as hard if it were not for them

 

Now your correct that theres no 100% garantee they wont fail eveb with regulation... But the odds are quite low... On the otherhand small banks fail more easily and if u have a whole wack of them, ull regularly have banks fail and ppl loosig assets over the . Not worth it in my opinion

I don't see why small banks would fail more easily. They can go bankrupt, and the owners will lose their jobs (probably forever) and maybe even go to jail. That's what happens with a small bank. Big bank have absolutely no reason to not make risky decisions besides heavy regulation (with almost no country has). 

Smaller banks will fix a lot of problems and most economics would agree on that

[Economy 52,839]

I don't see why small banks would fail more easily. They can go bankrupt, and the owners will lose their jobs (probably forever) and maybe even go to jail. That's what happens with a small bank. Big bank have absolutely no reason to not make risky decisions besides heavy regulation (with almost no country has). 

Smaller banks will fix a lot of problems and most economics would agree on that

​like i said, they compete harder, they stretch themselves more thin. Here in Canada we dont have many small banks, the Government prefers to encourage the current way... and for the record many Countries have the same view, i dont know that "most economics agree on that"

 

But in Portugal where i used to live there were way smaller banks. They alwasy offered higher interest rates for your money and lower interest rates for loans. They did this to try and get the deposits they needed to growth their business and to try to gain customers.

 

But the failure rate of these banks was quite high. Theres so many people in my grandparents village who lost money when the banks they gloated about that gave better rates failed. And it happened quite often

 

Competition is usually a good thing. It forces comapnies to offer more reasonable prices. It lowers their profit margin and as a result people are not ripped off as much

 

But the financial sector is very sensitive and you dont want those companies to be on the edge. Thats why many prefer to have larger banks and just regulate them more to prevent Corporate abuse. Banks are not companies you want competing too hard, theres a lack of security that way

[Luc 4,776]

​like i said, they compete harder, they stretch themselves more thin. Here in Canada we dont have many small banks, the Government prefers to encourage the current way... and for the record many Countries have the same view, i dont know that "most economics agree on that"

 

But in Portugal where i used to live there were way smaller banks. They alwasy offered higher interest rates for your money and lower interest rates for loans. They did this to try and get the deposits they needed to growth their business and to try to gain customers.

 

But the failure rate of these banks was quite high. Theres so many people in my grandparents village who lost money when the banks they gloated about that gave better rates failed. And it happened quite often

 

Competition is usually a good thing. It forces comapnies to offer more reasonable prices. It lowers their profit margin and as a result people are not ripped off as much

 

But the financial sector is very sensitive and you dont want those companies to be on the edge. Thats why many prefer to have larger banks and just regulate them more to prevent Corporate abuse. Banks are not companies you want competing too hard, theres a lack of security that way

​According to your logic one state-owned bank would be the best  highly regulated, no competition.

If banks are unable to grow after a certain percentage of GDP, the problem is fixed with competition and continuous higher interest rates.