Time to break up Citibank?
America's largest banks are so big they put the whole financial system at risk, argues Alan Greenspan and others
Breaking up is hard to do?
(AP Photo/Michael Probst)
Former Fed chairmen Paul Volcker and Alan Greenspan are part of a growing chorus in Washington saying the government should consider breaking up enormous banks. Members of Congress are trying to harness outrage over Wall Street bailouts and bonuses to push through a plan letting regulators preemptively break up financial institutions so large that their collapse could endanger the whole financial system. Are the days of giant banks numbered?
The left and right agree -- break them up: A bill introduced by left-wing Vermont senator Bernie Sanders would require Treasury to "break up too-big financial institutions within one year," says William Grieder in The Nation. There's a building political consensus behind it. "When the socialist from Vermont [agrees with] the right-wing" Greenspan, "can Barack Obama be far behind?"
"Why not tax Wall Street?"
Let big banks fail—don't break them up: Size isn't the problem, says Jaime Dimon in The Washington Post. Corporations and governments depend on the massive lending capabilities of the world's largest banks. Instead of imposing "artificial limits" on size, why not create smart regulations "to allow for the orderly failure of" big banks?
"Banks should be allowed to expand -- and fail"
Congress might do it to score points with voters: Next year, Democrats will enter the midterm elections "with little to show for their time in power," says David Reilly at Bloomberg. Wall Street's "huge profits" could make banks an inviting "political target"—particularly if the Dems fail to pass a health care bill. How better to "deflect populist anger than to collect a big-bank scalp?"
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3 Comments
Posted by Rickie, Tuesday, November 24, 2009, 1:48 pm Break them up. That worked real well with AT and T, right? If they are meant to be big, they will regain their status and stature. If not, so be it. Citibank has terrible top managment. That is their biggest problem. I propose breaking up our federal government. It is sinking us deeper in debt. They cannot grasp NOT OVERSPENDING, or even simple math. SO, let's break up the federal government because it is not too big to fail. Hell, they're failing right now. They just have the ability to run the money presses 24/7. otherwise, they would be sunk
Posted by John Knight, Tuesday, November 24, 2009, 2:10 pm Yes break up the large banks and other financial institutions do it now. If and when they are broken down prohibit other nations huge banks from coming in behind them and attempting take over of the now smaller banks in the U.S. or doing business in the U.S. without the approval of the U.S. Treasury. Note that I did not say Congress as they, like their international brethren, are far too prone to bribery.Given that action we should then place absolute term limits on all elected officials to no more than two o maybe three termsperiod.
Posted by nem0.n00ne, Tuesday, November 24, 2009, 6:59 pm I am generally conservative, but I agree. It should apply to all banks, including investment banks like Goldman Sachs. Any financial institution that is too big to fail is too big to exist. But do it with free market principles rather than government directives. Any financial institution that gets larger than a certain size loses it's FDIC protection. If they want to engage in high risk/big return gambles, they can do it without taxpayer protection if they bet wrong.
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