On June 22, Public Citizen was joined by U.S. Senator Jeff Merkley from Oregon, former congressman Brad Miller of North Carolina, MIT Professor Simon Johnson, University of Maryland Professor Rena Steinzor, and Marcus Stanley of Americans for Financial Reform to celebrate the release of Public Citizen’s latest publication. Too Big: The Mega-Banks Are Too Big to Fail, Too Big to Jail, and Too Big to Manage lays out the reasons why the current regulatory system has allowed mega-banks to remain too large.
Too Big immediately pinpoints the threat to American citizens’ interests as big banks continue to operate without adequate regulation:
“Americans suffered from the financial crisis of the 2008. Adding insult to injury, Americans were compelled to finance bailouts of banks responsible for the crash on the theory that permitting any to fail would cause a cascade of bankruptcies and inflict cataclysmic damage to the economy.
Yet today, the largest banks are even bigger than they were then.”
The book, by Bart Naylor, Public Citizen’s Congress Watch division’s financial policy advocate, focuses on commonsense solutions, in the form of regulatory and legislative reforms, to stem the unencumbered power and greed of the mega-banks.
Some of the solutions outlined include putting stronger requirements for the amounts of actual capital the banks must hold; reinstating a modern 21st Century Glass-Steagall Act, a prohibition on gambling with deposits made abundant by Federal Deposit Insurance Corporation (FDIC) taxpayer guarantees; creating safeguards to hold individuals and the Big Banks responsible for the wrongdoing that created the 2008 financial crisis; and other solutions to reduce the complexity and size of banks.
These solutions were highlighted at the Too Big release event, where Sen. Merkley discussed how campaign financing has seemingly placed some members of Congress and regulatory agencies into the pockets of big bank lobbyists. The Senator’s role in proposing the Volcker rule, a key provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, started forcing bankers to limit risky investments by blocking them from gambling for their own gain rather than the benefit of their customers. But, clearly that rule did not go far enough. That’s why we need to pass the 21st Century Glass-Steagall Act to end bank gambling with taxpayer-insured deposits once and for all.
In addition to Senator Merkley’s keynote, experts in the field focused on the dangers of allowing mega-banks to continue in their past and present practices without adequate regulation. Former Congressman Brad Miller has worked on banking reform for much of his career, called for stricter regulations and the end of the too big to jail reality. Professor Rena Steinzor focused on criminal culpability for recklessness that threatens consumers and workers alike.
Dr. Marcus Stanley, Policy Director for Americans for Financial Reform, discussed the need for big banks to properly manage their accounts, specifically calling for them to better understand how much they owe, who they owe, and who owes them.
Professor Simon Johnson closed the event by calling for an increase in capital requirements, pointing out the laughably small amount of capital banks actually hold. After the financial crisis, capital size at big banks increased only one percent from pre-2008 levels, demonstrating a lack of self-discipline to act responsibly in the face of economic instability.
The big banks will never willingly put an end to their own greed, so it’s incredibly problematic that they exert huge amounts of influence over the agencies that are tasked with regulating them. Worse, bankers that leave their positions on Wall Street may receive a hefty bonus as they leave — if they take posts in government agencies that regulate the banks. The conflict of interest is clear.
Too Big emphasizes Public Citizen’s dedication to substantive Wall Street reform that breaks up the big banks and puts the interests of consumers above the CEOs who engage in risky behaviors that ultimately cost American taxpayers billions.
Please join our campaign to Take On Wall Street, to reinstate Glass-Steagall to limit the size of banks and to keep them from engaging in risky bank gambling activities.
Americans cannot afford to gamble with our economy. It’s time to break up the banks.
“Too Big” is now available on Public Citizen’s website. You can find it here.
Amanda Bragg is an advocacy intern in Public Citizen’s Congress watch division.