Dec. 8, 2016
Shareholder Resolutions Call for Studies on Breaking Up Five Big Banks
Public Citizen’s Financial Policy Advocate Filed the Resolutions
WASHINGTON, D.C. – Public Citizen’s financial policy advocate has filed shareholder resolutions calling for studies of whether five major banks should be broken up because they are too large.
Over the past two weeks, Bartlett Naylor has filed resolutions with Bank of America, JPMorgan Chase, Wells Fargo and Citigroup. This week, he filed with Goldman Sachs. The resolutions call for the banks’ boards to develop a plan to break up the banks, analyze the merits of a breakup, analyze whether the banks are worth more in pieces and report the findings to shareholders.
All the institutions are “too big to fail,” meaning that if they run into serious financial trouble, taxpayers will be on the hook for bailing them out, as occurred after the 2008 financial crash.
Bank of America, for instance, received a government bailout after the 2008 crash and consists of more than 2,000 companies. Naylor maintains that it is nearly impossible to safely and effectively manage the daily operations and risks associated with such a megabank.
“There’s little dispute that megabanks are too big and no dispute that the issue deserves attention. This comprehensive set of resolutions simply asks for a breakup study at each one,” explained Naylor. “What’s really being tested is whether shareholder voices at these megabanks also will be quashed by the institutions’ sprawling influence over the shareholder voting system.”
Breaking up the banks could reduce the chance for another financial crisis like the one in 2008, which drained $14 trillion from the economy and led to more than five million foreclosures and the unemployment of more than 20 million workers.
“Trump’s Republican national party platform calls for the restoration of Glass-Steagall, which separated commercial and investment banking to limit incentives for banks to engage in risky behavior,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “These resolutions empower shareholders to do just that.”
The banks and the U.S. Securities and Exchange Commission still must review the resolutions and decide whether to put them forward for a shareholder vote.
Independent experts agree that the economy would be safer without behemoth banks. Read Naylor’s blog post with 10 reasons to support a study analyzing the merits of breaking up Bank of America.