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Big bank "break-up" idea gains ground in Congress

November 06, 2009 – Comments (2) | RELATED TICKERS: BAC , WFC , JPM

Just read this news from today.  This would be positive for people like me and you, taxpayers, and the economy in general.  Kinda like putting Glass Steagall back in place...

Article today in AP here

By Kevin Drawbaugh

WASHINGTON, Nov 6 (Reuters) - An independent U.S. senator on Friday introduced a bill that would give the government the power to identify and break up financial firms that are "too big to fail," an idea that is catching on.

"If an institution is too big to fail, it is too big to exist," said Senator Bernie Sanders in a statement.

"We should break them up so they are no longer in a position to bring down the entire economy," he said.

Sanders is an independent outside the U.S. political mainstream. But he is not the only one looking at break-ups.

Representative Paul Kanjorski, the Democratic chairman of the capital markets subcommittee in the U.S. House of Representatives, is working on a break-up power amendment.

It would give a new government systemic risk council break-up power, with clearance from the president.

"It's the natural action of capital to grow and exceed. Now we're going to contain it," Kanjorski told CNBC television.

He said large banks oppose his amendment because it would threaten them. But, he said, mid-sized and smaller financial institutions would be helped by it because they would be better able to compete if mega-firms were downsized.

"When the people's money is being used to bail out these large companies ... We certainly have to have someone to tell them what to do in order to save them," he said.

House Financial Services Committee Chairman Barney Frank said earlier on CNBC that a bill he is working on, which Kanjorski wants to toughen, would let a systemic risk regulator "break up" risky financial firms.

Elsewhere this week, the two largest UK retail banks -- Royal Bank of Scotland (RBS.L) and Lloyds Banking (LLOY.L) -- got more government aid and agreed to sell branches and businesses to appease European Union competition concerns over state aid.

EU regulators are considering measures to force banks across Europe to sell assets and sometimes even to break up to compensate for massive state aid they have received.  Continued on actual article page (click here)...

Existing power structures need to change.  Whether solutions like breaking up big banks get passed or not, if the existing power structure remains the same, nothing changes.  I'm talking about those in power having political sway in Congress to do thinks like get rid of the Glass Steagall act back in late 90s, swaying SEC to increase leverage limits to 30:1 (from 12:1).  If this doesn't get addressed, we've ignored the fundamental issue...and we'll have a continued system of republican & democrat control that creates more problems, one blames the other, patched up solutions are made, rinse, cycle, repeat, and the American citizens (and world citizens) continue to get raped indefinitely, a little more with each passing month. 

What do you guys think?