New Voices Pushing for a Big Bank Breakup
May 30, 2013 8:00 AM
The list of policy heavyweights calling for a breakup of the big banks has continued to swell since our last slideshow on the topic. Here are some of the latest endorsing the concept:
(image: Thinkstock)
David Vitter
The conservative Louisiana Republican unexpectedly joined forces with Sen. Sherrod Brown to unveil a bill that would effectively break up the big banks. The bill would require firms with more than $500 billion of assets to hold 15% capital, which most say would force them to downsize.
If "megabanks are so big the Justice Department will think twice and three and five and ten times about prosecuting them in a way they never would for other institutions, I think the American people's reaction to that is, these banks are not just 'too big to fail' or 'too big to prosecute' - the bottom line is they're just too big," Vitter said in March.
(Image: Bloomberg News)
Jim Bullard
Jim Bullard, the president of the Federal Reserve Bank of St. Louis, is known for his outspoken views on monetary policy, but in a recent interview he said that big banks were not necessary . He suggested regulators draft some metrics, not just based on size, and let firms operate within those restrictions.
"You could have smaller, not tiny, but smaller institutions that were small enough that you could let them fail and let them be innovative enough to sort of win the global battle."
(Image: Bloomberg News)
Charlie Munger
Warren Buffett's chief lieutenant said earlier this month that megabanks are too complicated and pose a threat to the system. He suggested the Brown-Vitter bill doesn't go far enough in curbing them.
"If you increase the capital requirements and let them do what they want, they will just get in trouble again."
(Image: Bloomberg News)
George Will
In a February column, the conservative columnist called for a Les Miserables-type revolt against the big banks.
"By breaking up the biggest banks, conservatives will not be putting asunder what the free market has joined together. Government nurtured these behemoths by weaving an improvident safety net and by practicing crony capitalism. Dismantling them would be a blow against government that has become too big not to fail."
Robert Reich
Political economist Robert Reich was swayed by JPMorgan's "London Whale" episode, arguing it proved banks were too big to manage.
"Let's also stop hoping Wall Street will mend itself. What just happened at J.P. Morgan - along with its leader's cavalier dismissal followed by lame reassurance - reveals how fragile and opaque the banking system continues to be, why Glass-Steagall must be resurrected, and why the Dallas Fed's recent recommendation that Wall Street's giant banks be broken up should be heeded."
(Image: Bloomberg News)
Peggy Noonan
Peggy Noonan, the former speechwriter for President Reagan, has also embraced a big bank breakup in a column called "It's Time for the GOP to Go Pirate ."
"Republicans should go to the populist right on the issue of bank breakup. Too big to fail is too big to continue. The megabanks have too much power in Washington and too much weight within the financial system. People think the GOP is for the bankers. The GOP should upend this assumption. In this case good policy is good politics."
Neil Barofsky
The former inspector general for the Troubled Asset Relief Program has repeatedly said big banks must be cut down to size.
"We have to
(Image: Bloomberg News)
Elizabeth Warren
While Warren's hasn't embraced the Brown-Vitter bill - at least not yet - she has repeatedly raised concerns that banks are too big, suggesting she, too, would like to see them broken up. Last week, she asked Treasury Secretary Jack Lew why more wasn't being done to regulate megabanks .
"How big do the biggest banks have to get before we consider breaking them up? They're 30% bigger now than they were five years ago. Do they have to double in size, triple in size, quadruple in size before we talk about breaking up the biggest financial institutions?"
(Image: Bloomberg News)
