When even Republicans start hating on the Big Banks, is it time to finally break them up?

In recent weeks, there have been a number of instances where the big Wall Street banks have been criticized as too-big-to-fail (TBTF), and even too-big-to-prosecute.

The list of critics has grown and now includes Senators Elizabeth Warren and Sherrod Brown, a number of Fed chairs, and even Attorney General Eric Holder.

Surprisingly, even some on the right are coming around, including George Will, Peggy Noonan and right-wing Federal Reserve board member from Dallas, Richard Fisher.

Eric Holder

US Attorney General Eric Holder says America’s big banks are too big to prosecute.

The Senate has been slow to move – there are plenty of campaign coffers stuffed full of Wall Street money – and progress there won’t be easy. It was just last month that the Senate approved Wall Street’s man Jack Lew to run the US Treasury. The White House has also been reluctant to side with Americans who have been left behind by Wall Street.

On the other side of the fight are Wall Street lobbyists, full of cash and still very much in control of Washington. Today’s Bloomberg editorial pushes back on the problem of the big banks relying too much on taxpayers. As Bloomberg reported recently the big banks receive$83 billion per year in federal handouts to Wall Street though according to another analysis, the amount is closer to $780 billion per year, equal to the entire stimulus bill every single year forever.

Despite the normal whining from Wall Street and its defenders, any business that takes billions of dollars from Uncle Sam should be subjected to more regulation and more inquiries about what they’re doing with that money. If they don’t want the questions, they shouldn’t take the money. But of course, their “profits” are dependent upon taxpayer money – the $780 billion annual subsidy is equal to ten times the banks’ annual profits – so they won’t be giving up the federal teat any time soon.

Bloomberg has also reported on the banks behavior related to the infamous “London whale” losses.

The largest U.S. bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary overseer, sometimes at Dimon’s behest, according to a report today by the Senate Permanent Subcommittee on Investigations. The 301-page document also shows how managers manipulated internal risk models and pressured traders to overvalue their positions in an effort to hide growing losses in a “monstrous” credit derivatives portfolio in London.

“We found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public,” Chairman Carl Levin, a Michigan Democrat, told reporters today after his investigators spent nine months combing through 90,000 documents and interviewing current and former executives.

This hardly sounds like an organization that is even trying to cooperate with government officials. It also sounds like an organization that cares little for the financial obligations of taxpayers who have been there to back up the bank in the past. According to these reports, JP Morgan has problems in its management at the highest levels.

I once ran a bank that was THIS big. JP Morgan's Jamie Dimon (photo by Steve Jurvetson)

I once ran a bank that was THIS big.
JP Morgan’s Jamie Dimon (photo by Steve Jurvetson)

As the largest US bank, the risk to the country from JP Morgan is much too high. While Simon Johnson has a great read in the NY Times about how the banks’ special status may finally be in trouble because of pressure from so many critics, I’m inclined to be on the other side. Like they’re saying at Zero Hedge, JP Morgan CEO Jamie Dimon ought to be taken away in handcuffs, but sadly he won’t be going anywhere.

There will be plenty of big talk about banks being too-big-to-regulate, but in the end, nothing will change. The Senate may take down a sacrificial lamb or two, to prove they’re “tough on banks” (former JP Morgan risk director Ina Drew may be one of them).

If Drew is to take the fall, don’t forget that she already walked away with a fat retirement after being pushed out the door – so any “punishment” will be mitigated. Having said that, there are very few women on Wall Street at the higher levels – it might be nice to take down some of the old boys too.


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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  • Richard_thunderbay

    Too big to fail = too dangerous to exist. Forget any hostile countries, the big banks are by far the largest existential threat we face today.

  • NMRon

    For Rethugs it’s all show. They wouldn’t dare bite the hand that feeds them.

  • RepubAnon

    About the only way I can see bank regulation passing is if we can start a whispering campaign claiming that President Obama opposes it. The wingnuts would immediately propose legislation for massive bank regulations… and they’ll be equally fanatical about opposing such regulations if President Obama suggests that it might be a good idea.

  • Hue-Man

    Does the $780 billion include the billions of dollars stolen from savers – mostly retirees – to subsidize the mega-banks through the Fed maintaining a zero-rate interest policy? Rather than the government spending on the repair of crumbling infrastructure and other labor-intensive projects to get out of the Great Recession, Bernanke and Co. have propped up the banks with 0% loans to earn record profits so that the robber barons at the banks (ironic isn’t it?) can pay themselves multi-million dollar bonuses; all subsidized by the very people Obama and the TeaParty/GOP want to put on a cat-food diet by taking away Medicare and Social Security.

    Government motto of the 2000s: Steal from the poor to give to the rich.

  • Ninong

    Thank you for the correction!

    I forgot that Eric Holder, who approved the DOMA defense that cited pedophilia and incest as reasons to retain it, didn’t actually write it himself. The guy who wrote it was a Bush holdover but Holder was an Obama appointee.

  • Mike Meyer

    They are NOT too big to fail. THEY FAILED in 08. Its just THE TAXPAYER is not wise enough to stop the BANKER WELFARE.

  • Vegas Dave

    Too Big to Fail? Just too damn big to exist! If we can’t prosecute because doing so would damage the world economy, break them up.

  • perljammer

    If you think Holder was one of the “W” appointees in high positions retained by Obama, you are incorrect. He was appointed Deputy Attorney General by Clinton, and briefly served as acting Attorney General until Ashcroft was appointed (by W) to succeed Janet Reno. If you know he wasn’t appointed by W, then thanks for your contribution to the off-topic noise.

  • masaccio

    Jamie manages risk by changing the measuring stick. Levin forced Braunstein to own those changes.

  • Ninong

    It’s a shame fearless leader retained so many “W” appointees in high positions. If he thought it would appease the Republican Tea Party, he was mistaken. They would drive a tank over their own grandmothers if they got in the way.

  • Ninong

    I guess this means Jamie Dimon loses the title “King of Risk Management.”

  • nicho

    and even Attorney General Eric Holder.

    When this useless POS gets onboard, the moment has probably passed. He’s still thinking about whether women should have the right to vote.

  • justadood

    will the Banks be prosecuted? Nope. Even if the Right comes around and publicly announces that they understand the banks’ abuses, and that crimes occurred, they still know what side of the bread the butter’s on, and will refuse to prefer charges against the Banks. The money and its corruption run too deep for there to be so simple a solution at this point.

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