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Break Up The Big Banks

The BriefGet Up To Speed

To prevent the collapse of the global financial system in 2008, Treasury committed 245 billion in taxpayer dollars to stabilize America'€™s banking institutions. Today, banks that were once '€œtoo big to fail'€ have only grown bigger, with JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, and Goldman Sachs holding assets equal to over 50% of the U.S. economy. Were size and complexity at the root of the financial crisis, or do calls to break up the big banks ignore real benefits that only economies of scale can pass on to customers and investors?

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FOR
The Case for Breaking Up the Big Banks

We have paid too little attention to the growing economic and political power of our largest firms, and this concern is not limited to the financial sector.

Tuesday, November 20, 2012
Mark Thoma
Bigger Banks, Riskier Banks: The Post-Bailout Continuation of a Pre-Bailout Trend

It is time for Congress to create a framework for banks to transform themselves into leaner, more accountable, and sustainable financial institutions.

Tuesday, March 1, 2016
Nomi Prins and James Lardner
Break Up the Banks

It’s politics, not economics, that made them behemoths.

Monday, April 5, 2010
Arnold Kling
Too Big to Live

Banks that are too big to fail are too big to exist. If they continue to exist, they must exist in what is sometimes called a “utility” model, meaning that they are heavily regulated.

Monday, December 7, 2009
Joseph Stiglitz
Too Big for Comfort

The evidence shows that the supposed benefits from supersized banks' scale are outweighed by the risks of disaster they generate.

Friday, June 1, 2012
James Pethokoukis
Big-Bank Pioneer Now Seeks Breakup

Weill, who built Citigroup Inc. through repeated acquisitions—including the 1998 megadeal that prompted Congress to strike down a six-decade-old ban on commercial banks doing investment banking, and vice versa—called for the breakup of huge U.S. financial conglomerates.

Thursday, July 26, 2012
E.S. Browning and David Benoit
AGAINST
In Defense of Big Banks

Breaking up some big banks would hurt their customers, clients and the broader economy. It would actually inject new risks into the financial system.

Wednesday, August 22, 2012
William Harrison
The Big Banks: Too Complex to Manage?

Radical approaches to ending ‘too big to fail’ like reducing bank complexity and size, or creating ‘narrow banks’, are unlikely to succeed.

Tuesday, March 1, 2016
Central Banker
Scale Economies in Banking and Financial Regulatory Reform

The literature on scale economies in banking suggests that imposing a strict size limit would have unintended consequences and work against market forces.

Wednesday, September 1, 2010
Loretta Mester
Banking on Our Future: The Value of Big Banks in a Global Economy

Ultimately, breaking up U.S. banks will not improve the safety of the global financial sector and would reduce U.S. influence over the financial sector globally.

Friday, February 1, 2013
Hamilton Place Strategies
Breaking Up the Big Banks: Is Anybody Thinking?

Although breaking up the largest US banks has attracted significant support from some politicians and commentators, these and other supporters seem to have ignored basic questions that must be answered before a breakup would make sense.

Tuesday, September 18, 2012
Peter Wallison
Dodd-Frank Act
The Dodd-Frank Act

Proponents contend its major provisions--monitoring systemic risk, limiting bank proprietary trading (the ‘Volcker rule’), placing new regulations on derivatives, and protecting consumers--will help prevent another financial crisis. Detractors, including many Republicans and Wall Street executives, argue that the reforms will imperil future economic growth by over-constraining the financial system.

Friday, September 13, 2013
Steven Markovich
Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act

A summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Wednesday, September 1, 2010
U.S. Senate Committee on Banking
Dodd-Frank Act: After 3 Years, a Long To-Do List

The Dodd-Frank Wall Street Reform and Consumer Act is a delayed work-in-progress.

Thursday, September 12, 2013
Kevin McCoy
Too Big Not to Fail

Flaws in the confused, bloated law passed in the aftermath of America’s financial crisis become ever more apparent.

Saturday, February 18, 2012
The Economist
Brown-Vitter Bill
Make Wall Street Choose: Go Small or Go Home

Our bill aims to end the corporate welfare enjoyed by Wall Street banks, by setting reasonable capital standards that would vary depending on the size and complexity of the institution.

Wednesday, April 24, 2013
Sherrod Brown and David Vitter
Brown-Vitter Bill Struggling for Support in Congress

The legislation takes direct aim at the largest U.S. banks — including JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs, which have assets of $500 billion or more — by requiring them to meet tougher capital standards, or how much they fund themselves through equity instead of debt.

Monday, June 10, 2013
M.J. Lee
Brown-Vitter Bill: A Capital Fix for Troubled Markets

The Terminating Bailouts for Taxpayer Fairness Act, introduced by Sens. Sherrod Brown, D-Ohio, and David Vitter, R-La., would implement higher capital levels to address one of the most egregious distortions of our free market system—the government guarantee against failure of our largest financial firms.

Thursday, May 16, 2013
John Buhrmaster
Why We Don't Need Brown-Vitter—Yet

Let's assume the legislation is enacted as written and the largest banks all decide to break themselves up to get below the $500 billion asset threshold to qualify for a lower capital requirement of 8%. That would make the largest bank in the U.S. the 51st largest in the world, just ahead of Banque Federative du Credit Mutuel in France.

Wednesday, May 1, 2013
Barbara Rehm
21st Century Glass-Steagall Act
21st Century Glass-Steagall Act

To reduce risks to the financial system by limiting banks’ ability to engage in certain risky activities and limiting conflicts of interest, to reinstate certain Glass-Steagall Act protections that were repealed by the Gramm-Leach-Bliley Act, and for other purposes.

Wednesday, December 31, 1969
Elizabeth Warren
Scaling Back ‘Too Big': The 21st Century Glass-Steagall Act Would Reduce the Risk of Another Crash

The 21st Century Glass-Steagall Act would reduce risk in the system and dismantle the behemoths, helping to ensure they are not too big to fail — or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail.

Wednesday, September 18, 2013
Elizabeth Warren
Glass-Steagall Critics Get a Little Bit Right and the Rest All Wrong

Glass-Steagall targets one of five major issues that need to be addressed to buttress the banking system. It is designed to complement other reforms, some already enacted in the Dodd-Frank financial reform law, and others still to come.

Friday, August 23, 2013
David Brodwin
Glass-Steagall Now: Because the Banks Own Washington

What is striking about the argument on re-instating Glass-Steagall is that there really is no downside.

Monday, August 5, 2013
Dean Baker
Restore Glass-Steagall? Most of It Was Never Repealed

As policymakers respond to FDIC Vice-Chairman Hoenig’s call for a ‘healthy debate’ about the ‘21st Century Glass-Steagall Act’ introduced by Senators Elizabeth Warren and John McCain, they need to start with an accurate understanding of just what the Glass-Steagall Act provided and how subjects covered by the new bill have already been treated by the Dodd-Frank Act.

Wednesday, July 24, 2013
Winthrop Brown
Additional Articles
What's Inside America's Banks?

In the wake of the recent financial crisis, the government has moved to give new powers to the regulators who oversee the markets. Some experts propose that the banking system needs more capital. Others call for a return to Glass-Steagall or a full-scale breakup of the big banks. These reforms could help, but none squarely addresses the problem of opacity, or the mischief that opacity enables.

Wednesday, January 2, 2013
Frank Partnoy and Jesse Eisinger
By Every Measure, the Big Banks Are Bigger

Assets at the six largest U.S. banks are up 37% from five years ago. What happened?

Friday, September 13, 2013
Stephen Gandel