Open Letter to U.S. Senator Chris Dodd
Chairman Senate Banking, Housing and Urban Affairs
Dear Senator Dodd,
As women and as taxpayers, we are writing to you today to tell you that size matters.
Usually we love big. Big boxes of chocolate, big boxes of wine, big -- well, you know. But when it comes to big banks and big bank bailouts, it's a whole different story.
As you get ready to take up bank reform in your committee next week, we need to talk.
When Congress voted to repeal depression-era Glass-Steagall protections, it put the big banks on Viagra. Since then they have had a big problem and it has lasted a lot longer than four hours.
The top five banks hold 50% of all bank assets. That hurts. They are simply too big for their britches. They have been ramping up those big bank fees, paying out big bank bonuses and spending big bucks on bank lobbyists to defeat reform.
We know what those big banks are telling you -- "size doesn't matter." JP Morgan's Jamie Dimon may be cute, but he is just a player. Big bank bravado only leads to big bank bailouts. After spending $4 trillion on the latest one, we simply can't afford to get knocked up for another.
It's better to be safe than sorry. Now is the time to take the prophylactic approach. Your bill needs a hard cap the size of the biggest banks. That right, cap 'em, shrink 'em, slice 'em, dice 'em. Economist Simon Johnson tells us that no bank's liabilities should be greater than 2% of the nation's Gross Domestic Product (GDP). Did you know Bank of America's liabilities are 14% of GDP? Your teeny, tiny $50 billion bailout fund would leave taxpayers on the hook for trillions if that big boy went belly up.
So be a big man and do the right thing. You can prevent the next crisis and by doing so you will give yourself (and us) a great deal of satisfaction.
Put a real size cap in the bill -- the one you have now does absolutely nothing -- and put stronger Glass-Steagall protections in place so we are no longer taking chances that are too big and will fail.
This applies to the financial sector, banking, home-mortgage, auto-industry, healthcare, education, etc,. Nearly all working in each of these sectors want NO government interference. Yet those working in these fields refuse to address their own rot.
Two decades ago, we were told about "Economies of Scale". So every enterprise grew claiming to be efficient with lower administrative overheads. Now the buzz-phrase is "Too big to fail" with overhead cost of each enterprise in the various sectors in the region of 30%. So much for "economies of scale".
We all expect the elected representatives in Washington, DC to come up with solutions. The problem, these elected representatives in Washington DC are bought and paid-for by the very individuals and institutions that created this mess. This applies to both chambers and both political parties.
So the Big Fraud is widespread across the country.