Held Hostage by Bank of America

Flickr by I-5 Design and Manufacture

President Obama has promised that, “Never again will the American taxpayer be held hostage by a bank that is too big to fail.” He continues to use similarly vivid imagery to describe the leverage “too big to fail” banks have over the financial system and the threats they pose to our economy. Fortunately, the Dodd-Frank Wall Street Reform and Consumer Protection Act provides financial regulators new tools to break up and reform such dangerous financial firms.

Financial regulators must fulfill the president’s and the law’s promise by using those tools to break up Bank of America.

Public Citizen filed a petition with the Federal Reserve and the Financial Stability Oversight Council a few weeks ago, calling on them to use their authority under section 121 of the Dodd-Frank Act to mitigate the “grave threat” that Bank of America poses by breaking it up and reforming it. If regulators do their jobs correctly, the resulting institutions will be smaller, simpler and safer.

The new institutions could also add value to the company and the economy. For example, Former Republican-nominated FDIC chair Sheila Bair has said that Bank of America and Citi shareholders could gain approximately $270 billion in market value if they were broken up, and JP Morgan Chase shareholders could see $52 billion in appreciation. Indeed, the sum of the parts would be worth more than the whole. This added value would be great for investors, customers and employees, and give the bank an opportunity to create jobs.

The views in the petition are receiving widespread support, and in some unexpected places. One supporter was so inspired by the petition that he decided to help the cause. Micha Liberman, a Hollywood music editor who won an Emmy for his work on the HBO series Deadwood, and who is currently nominated for a Motion Picture Sound Editors Golden Reel award for his work on the Steven Spielberg television series Terra Nova, decided to make a video about the petition. It gets straight to the “too big to fail” problem and why Bank of America should be broken up.

If Bank of America goes down, a sizable chunk of our economy will go down with it. After more than $1 trillion of federal assistance has already gone toward propping up this sprawling behemoth, it should be unthinkable to keep propping it up. Instead, we need to start breaking it up.

We cannot wait and find out whether another financial crisis strikes. If that happens, it will be too late to act. This is why Public Citizen filed a petition to financial regulators to break up and reform Bank of America, and why your voice must also be heard. Let’s make sure “too big to fail” is more than just a sound bite.