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.
“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.