Share on Google Plus Share on Twitter Share on Facebook 2 Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 4 (6 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   5 comments

OpEdNews Op Eds

TARP is Over, But the Bailouts Will Continue Until the Big Banks are Broken Up -- And Washington Knows It

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): ; ; , Add Tags Add to My Group(s)

Must Read 2   Well Said 2   Valuable 2  
View Ratings | Rate It

opednews.com Headlined to H2 1/8/13

Become a Fan
  (105 fans)


TARP -- the infamous Troubled Assets Relief Program that bailed out Wall Street in 2008 -- is over. The Treasury Department announced it will be completing the sale of the remaining shares it owns of the banks and of General Motors.

But in reality it's not over. The biggest Wall Street banks are now far bigger than they were four years ago when they were considered too big to fail. The five largest have almost 44 percent of all US bank deposits.

That's up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent.

The biggest banks keep getting bigger because they can borrow more cheaply than smaller banks. That's because investors believe the government will bail them out if they get into trouble, rather than force them into a form of bankruptcy (as the new Dodd-Frank law makes possible).

That's why it's necessary to limit their size and break up the biggest.

Washington may be getting the message. A few months ago Dan Tarullo, the Fed governor who specializes in bank regulation, proposed capping the size of the banks' balance sheets.

Some former titans of Wall Street are saying much the same thing. Even Sandy Weill, who created Citigroup (which required $445 billion in TARP loans and asset guarantees) is proposing the biggest banks be broken up. 

The new Congress may also be supportive. The new chairman of the House Financial Services Committee, Texas Republican Jeb Hensarling, has been a strong ally of small banks in their push to rein in their bigger rivals, and has expressed concern about the largest being too big to fail.

It's not irrelevant that the Dallas branch of the Federal Reserve Board, in Hensarling's home district, has also proposed breaking up the biggest.

Meanwhile, over in the Senate, Ohio Senator Sherrod Brown,  is a strong advocate for breaking up the big banks  and  is now on the Senate Finance Committee. And Elizabeth Warren, scourge of Wall Street, will sit on the Senate Banking Committee.

In other words, the timing is right. The oven is ready. All we need is another multi-billion dollar banking loss -- like JP Morgan Chase's last year -- and the biggest banks are cooked.

 

http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society

Why the Right-Wing Bullies Will Hold The Nation Hostage Again and Again

The Gas Wars

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
5 people are discussing this page, with 5 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

We have been played. The old game of Republican ag... by Steven G. Erickson on Tuesday, Jan 8, 2013 at 5:32:28 PM
having decided to bite the hand that FED it, and t... by John Sanchez Jr. on Wednesday, Jan 9, 2013 at 7:19:21 AM
Federal Reserve - an exclusive banking cartelYes, ... by Lance Ciepiela on Wednesday, Jan 9, 2013 at 9:09:19 AM
financial reform meant more fees and regulations f... by Ray O. Sunshine on Wednesday, Jan 9, 2013 at 1:49:01 PM
about the evils inherent in the private banks. We ... by Richard Girard on Wednesday, Jan 9, 2013 at 4:17:34 PM