If banks are too big to prosecute, break ’em up

US Attorney General Eric Holder finally admitted to the US Senate Judiciary Committee yesterday that America does in fact have a number of banks that are “too big to fail,” and the banks’ largesse makes prosecuting them impossible, given the supposed economic consequences of such a prosecution.

Okay, then break ’em up.

Here’s Holder at the hearing, followed by a quick video clip of his comments:

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 ont he national economy, perhaps even the world economy.  And I think that is a function fo the fact that some of these institutions have become too large….  I think it has an inhibiting impact on our ability tob ring resolution that I think would be more appopriate.

Now that Attorney General Holder has publicly said the big banksters are “too big to prosecute,” why are we not seeing any move to break them up?

The big banks brought down our economy and got away with economic murder.  And while we’re finally hearing from people like Holder the suggestion that the banks “should” have been prosecuted, but-for their “too big to prosecute” status, those banks are still receiving $83 billion in government handouts every year (roughly the amount of their so-called profits).

Just last week, the Chairman of the US Federal Reserve, Ben Bernanke, agreed with US Senator Elizabeth Warren that the TBTF/TBTP banks should no longer receive their $83 billion a year taxpayer subside. So why are they? We’d at the very least save $83 billion a year if we broke up the big banks, that’s not a small annual savings when they’re considering gutting Medicare and Social Security for far fewer savings (raising the Medicare eligibility age might save the feds $15bn a year, while breaking up the banks could save $83bn).

Bernanke also suggested breaking up the banks in 2010.

And it’s not just Bernanke.  The head of the Dallas Fed, Richard Fisher, agreed in 2010 that we ought to start considering breaking up the biggest banks:

“The disagreeable but sound thing to do regarding institutions that are too big to fail is to dismantle them over time into institutions that can be prudently managed and regulated across borders,” Fisher said in prepared remarks to the Council on Foreign Relations.

One prominent proposal for reform, known as the Volcker rule after Paul Volcker, the former Fed chairman and White House economics adviser who devised it, would limit taxpayer backing for banks whose primary activities are speculative in nature.

“I align myself closer to Paul Volcker in this argument and would say that if we have to (break up banks) unilaterally, we should,” Fisher said.

Kansas City Fed President Thomas Hoenig agreed:

“We must break up the largest banks, and could do so by expanding the Volcker Rule and significantly narrowing the scope of institutions that are now more powerful and more of a threat to our capitalistic system than prior to the crisis,” Hoenig told a meeting of the Women in Housing and Finance.

Hoenig called for “Glass Steagall-type” provisions that would no longer allow commercial banks to engage in the riskier activities normally confined to the investment sector.

“We must make sure that large financial organizations are not in position to hold the U.S. economy hostage.

But they do, Blanche – but they do.  Yet nothing ever happens to change that fact.

But hope springs eternal.  Since the political class has finally come around to a fact the rest of us knew a long time ago (Holder really ought to read more Taibbi), why is this charade still going on? Why are taxpayers subsidizing Wall Street, and why do we continue to let Wall Street hold America’s economy hostage to its own largesse?

It’s rather disturbing to hear the US Attorney General express such fear of being held hostage by a criminal enterprise, yet he offers no solution to the Wall Street Mafia.

If the banks are too big to fail, and too big to prosecute, then break them up and be done with it.


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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19 Responses to “If banks are too big to prosecute, break ’em up”

  1. Peter says:

    Why Eric Holder protected big bank Criminals?

    Attorney General Eric Holder’s admission that some banks are too big to prosecute, shocked whole nation, and caused unanimous criticism nationwide, including Republican and Democratic Senators.

    Why Eric Holder is concerned that the size of some of these institutions is so large that it will be difficult to prosecute? He says that it will have a negative impact on the national economy, perhaps even the world economy.

    That is opposite! Big Banks’ financial fraud caused the largest recession in our history, as well as created the Global Financial Crisis. The Attorney General Eric Holder’s passivity allows continued Big Banks’ Criminal Behaviors to go unstemmed. This will result in an economic disaster of catastrophic proportions. Only quick and aggressive actions to punish and stop big bank’s criminal practices can protect our economy from further financials crisis.

    What is Eric Holder’s motivation and benefits to not prosecute those big banks?

  2. pappyvet says:

    So then Plutocracy is not on the way , its here. And they will make America suffer as much as possible to rid itself of it. We were warned about this. And not just last week or last month or last year.

  3. Bill_Perdue says:

    Breaking them up’s been tried. They’ll just find another Clinton, the worst president in modern history, He’s a political prostitute who gave us DADT, NAFTA, DOMA, the end of welfare, a couple of hundred thousand new cops hired and who signed the deregulation bills of 1999 and 2000. They own both parties and can break or repeal all the rules over and over. http://www.youtube.com/watch?v=qOP2V_np2c0&feature=player_embedded

    Banks, cults like the catholic and mormon cults, financial institutions and corporations should be taxed 100% of what they would pay individual stockholders who have an annual income of over $250.000.00 per year from all sources.

    Individuals should be taxed 100% of the their income or over $250.000.00 per year from all sources. Individuals or families making less than $50,000.00 per year should be totally tax exempt and we should return to the progressive tax schedules of the Truman and Eisenhower era.

    Hiding assets overseas should be an offense punishable by life at hard labor and confiscation of wealth. Emigration to prevent payment of taxes should an offense punishable by life at hard labor and confiscation of wealth.

    Passing laws or signing regulations to create tax loopholes for the rich should be grounds for immediate dismissal from legislatures and executive office.

  4. Suave says:

    Let’s get a couple things straight. Big Bad Ben B. is a complete failure when it comes to understanding or running the economy. If he studied the depression then he must have failed. I don’t buy into this preventing the financial world from collapsing because it was only a temporary move in the stock market.

    The problem is we have become a nation of cowards when writers and journalists feel no fear in attacking Obama or Holder, but watch people like Geitner and Big Ben completely flounder in impotent failure without any accountability! It’s like letting the bank robbers get away, while we blame “the system”. give me a break. last I checked “the system” can be broken down into names of only a few board members of many large banks and powerful institutions.

    So Holder should be commended for doing something many others don’t have the guts to do- tell it like it is. We all know that Too Big To Fail is just a cowards way of saying the banks hold the cards now because we were too stupid to stop them as we were worried about Bonds taking steroids, Vick and his damn dogs, and finally Tiger doing what men with money do!

    At the end of the day America got taken by those Bail Outs, billions were drained by being led to IRAQ by an oil man and defense entrepreneur, and IRAQ is an event that will require a national therapist as we killed lots of innocent people. DEAL WITH IT. These issues are much bigger than Obama and Holder. The beneficiaries of these events have power…like bringing down the stock market.

    Well don’t take it from me, but now when I travel there a many people of intelligence and education are laughing at the US. Think about it? When was the last interview you heard from a foreign person of significant power? they are not laughing at Obama as we watched the banks take our children’s bedrooms away. I’m not scared of the flu season, as the coward season has lasted since 2008!

    PEACE

  5. Sweetie says:

    It is racist, and I do get the point.

  6. Sweetie says:

    “It’s rather disturbing to hear the US Attorney General express…”

    Umm… It’s 2013. You’d had how long to figure out that when Eric Holder speaks…

  7. nicho says:

    Yeah — so would your job, your pension, your food supply, your medical care. The bailouts saved the economy, but that shouldn’t have been necessary.

  8. perljammer says:

    “… the banks’ largesse makes prosecuting them impossible …”

    “Largesse” doesn’t mean what you seem to think it does, unless you think that big banks are immune to prosecution because of their generosity. Or, maybe you’re implying that their generosity is expressed in the form of bribes to public officials, in which case the same attribute would also tend to protect them from being broken up.

    Or, since this is all about “too big to fail”, maybe it’s just a misspelling of “largeness”, which isn’t a word at all.

  9. BeccaM says:

    I like to juxtapose things, ala Rachel Maddow style, that seem dissimilar, except that they’re not.

    The U.N. has passed new sanctions against North Korea, in retaliation for its recent nuclear weapons tests and probably also because of their increasingly bellicose declarations that they plan to go to war with America and the rest of the west. Economic pressure is being brought to bear as a means to try to force a sovereign nation to do what the majority of the rest of the world wants. Money as leverage. A tactic that North Korea clearly interprets as a threat to its sovereignty and national security.

    Sanctions — or economic warfare — is an increasingly common tactic used in the last several decades. It’s used because it works. Sure, it takes longer than a military invasion, but people seem far more willing to go this route than the blood and bombs way.

    We have financial entities that can wreck the entire world’s economy — and they have, simply by doing what they do best, which is to plunder and to create fake wealth out of nothing but computer code and near-infinite onion layers of derivative financial instruments. They are a real and present danger to every country, and are answerable to none of them, only to their owning investors and executives. They act in ways that are contrary to American economic interests, and this by extension — as illustrated above — can be interpreted as a threat to national security.

    If they’re big enough that the failure of any one of these bloated plutocratic bastard behemoths threatens the world economy, then they simply must be broken up — because one day, those threats will inevitably be carried out, for one reason or another.

  10. guest1 says:

    Well libertarians are against bailouts and subsidies, the megabanks would be gone without bailouts.

  11. nicho says:

    Banks, as well as other corporations, are government creations. They are chartered by the government. The government should not create anything it can’t control. It’s just like someone getting a vicious dog they can’t control.

    The biggest things that impact my life in a negative way are corporations. I will take “libertarians” seriously when they talk about first doing away with the mega corporations. If they don’t, they’re full of shit.

  12. Buford says:

    Common sense… said another way, ‘Too big to fail means too big to go unregulated’.

  13. Just_AC says:

    As I said last week – that 83 Billion is pretty much the same dollar as the sequester amount that everyone has been running around crazy trying to fix

  14. Are we supposed to believe that if we prosecute a crook at the top of the food chain there won’t be an equally qualified scumbag crook to move up in his place and therefore crash the world’s economy?

    This excuse is an insult to anything with a IQ hovering somewhere around that of a cucumber’s.

    Sounds to me like a excuse looking for a reason to let the super-wealthy off Scott free; again and again and again.

    For a real-world example, how many time have we killed Al qaeda’s number 2 guy… about 78?

    How destroyed are they?

    Elizabeth rules!

  15. Naja pallida says:

    They can, and have, got away with anything and everything.

  16. hoary_nodens says:

    LOL…as if there were any doubt that the megabanks are in complete control…they don’t even care if one of their house ni**ers admits this to congress with the cameras rolling.

    Democracy, republic, whatever you want to call it, it’s so over. Republican, Democrat, it’s completely meaningless.

    And if you think this comment is racist, you are SO missing the point.

  17. caphillprof says:

    Arrest them as material witnesses and let them spend several weeks in Guantanamo. They won’t be too big for plea agreements.

  18. whipmeco says:

    if they can get away with money laundering, why can’t they get away with anything?

  19. Max_1 says:

    You can’t get paid when you throw your boss in jail…
    … And the pay cut from the breakup hits the dinner table.

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