THE BLOG

Break Up Big Banks

05/07/2015 11:42 am ET | Updated May 07, 2016
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We don't hear it discussed much in the media, but the reality is that the middle class of this country, once the envy of the world, is collapsing, 45 million Americans are living in poverty, and the gap between the rich and everyone else is growing wider and wider.

Despite a huge increase in technology and productivity, median family income is almost $5,000 lower today than it was in 1999.

There are 45 million people living in poverty and we have the highest rate of childhood poverty of any major country on earth. Half of the American people have less than $10,000 in savings and have no idea how they will retire with dignity. Real unemployment is not 5.5 percent - it's close to 11 percent.

Today, 99 percent of all new income goes to the top 1 percent. During the last two years, the 14 wealthiest Americans saw their wealth increase by $157 billion, which is more wealth than is owned by the bottom 130 million Americans.

In the midst of all this grotesque level of income and wealth inequality comes Wall Street.
As we all know, it was the greed, recklessness and illegal behavior on Wall Street six years ago that drove this country into the worst recession since the Great Depression.

Millions of Americans lost their jobs, homes, life savings and ability to send their kids to college. The middle class is still suffering from the horrendous damage huge financial institutions and insurance companies did to this country in 2008.

It seems like almost every day we read about one giant financial institution after another being fined or reaching settlements for their reckless, unfair, and deceptive activities.

In fact, since 2009, huge financial institutions have paid $176 billion in fines and settlement payments for fraudulent and unscrupulous activities.

It should make every American very nervous that in this weak regulatory environment, the financial supervisors in this country and around the world are still able to uncover an enormous amount of fraud on Wall Street to this day. I fear very much that the financial system is even more fragile than many people may perceive. This huge issue cannot be swept under the rug. It has got to be addressed.

Although I voted for Dodd-Frank, I did so knowing it was a modest piece of legislation. Dodd-Frank did not end much of the casino-style gambling on Wall Street. In fact, much of this reckless activity is still going on today.

During the financial crisis of 2008, the American people were told that they needed to bailout huge financial institutions because those institutions were "too big to fail."

Yet, today, three out of the four financial institutions in this country (JP Morgan Chase, Bank of America, and Wells Fargo) are 80 percent larger today than they were on September 30, 2007, a year before the taxpayers of this country bailed them out. 80 percent!

No single financial institution should be so large that its failure would cause catastrophic risk to millions of Americans or to our nation's economic well-being.

No single financial institution should have holdings so extensive that its failure would send the world economy into crisis. If an institution is too big to fail, it is too big to exist.

The enormous concentration of ownership within the financial sector is hurting the middle class and damaging the economy by limiting choices and raising prices for consumers and small businesses.

Today, just six huge financial institutions have assets of nearly $10 trillion which is equal to nearly 60 percent of GDP. These huge banks handle more than two-thirds of all credit card purchases, write over 35 percent of the mortgages, and control nearly half of all bank deposits in this country.

If Teddy Roosevelt were alive today, do you know what he would say? He would say break 'em up. And he would be right. And that's exactly what I plan to do.

A bill that I've written would require financial regulators within one year to identify and break-up huge financial institutions like JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo and Morgan Stanley so that they can never again cause another financial crisis like the one that happened in 2008.

I am delighted that this legislation has been endorsed by the Independent Community Bankers of America, representing more than 6,000 community banks. Their support is an important recognition that the function of banking should be boring and the current situation still contains too much risk and too much emphasis on profit-making.

The function of banking should be to provide affordable loans to businesses to create jobs. The function of banking should be to provide affordable loans to Americans to purchase homes and cars. Wall Street cannot be an island unto itself and we need to break up those largest banks to put the focus back on working class Americans.