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 Who wants to break up big banks? The Senate, apparently 
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Post Who wants to break up big banks? The Senate, apparently
Will it actually happen???
WaPo wrote:
Who wants to break up big banks? The Senate, apparently
Posted by Suzy Khimm on March 25, 2013 at 11:05 am

Yes, the measure was purely symbolic and Congress isn’t exactly known for following through on its promises, but the Senate’s unanimous vote late Friday night to break up big banks has left some financial analysts wondering whether Washington might actually follow through.

During its marathon “vote-a-rama,” the Senate took up a budget amendment from Sen. David Vitter (R-La.) to “end ‘Too Big to Fail’ subsidies or funding advantages for Wall Street mega-banks (over $500 billion total assets).” The non-binding amendment passed unanimously, 99-0. The $500 billion threshold would encompass the six largest U.S. banks.

The Guggenheim Washington Research Group believes that the unanimous vote on the Vitter measure is a sign that there’s the political will to push it through. “The fact that both measures easily passed suggests there could be support for them as amendments to other bills,” the firm writes, referring to both the Vitter amendment and a separate amendment from Sen. Tim Johnson (D-S.D.) that restricts the use of Fannie Mae and Freddie Mac fees to fund other parts of the government.

Guggenheim points out that the Vitter amendment doesn’t prohibit big banks outright but instead suggests that regulators would be allowed to penalize them, giving them a major incentive to break up:

Quote:
The break-up-the-bank amendment is designed to eliminate any funding advantage or subsidy that the mega banks enjoy…The government would not directly tax the banks to take away this advantage. Rather it would be up to the regulators to find a response. We would expect these to include higher SIFI surcharges and unsecured debt requirements. We believe the ultimate goal is to convince the six biggest banks that they would be better off breaking themselves up.


And it may not be long before this symbolic measure turns into actual legislation. Vitter has partnered with Sen. Sherrod Brown (D-Ohio) to develop bipartisan legislation to break up big banks. And their campaign has gained popular traction on both right and left: Dallas Fed President Richard Fisher tried to rally conservative activists at CPAC behind the issue this month, and it’s long been a pet issue for the Occupy crowd.

http://www.washingtonpost.com/blogs/won ... pparently/

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March 26th, 2013, 9:58 am
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Post Re: Who wants to break up big banks? The Senate, apparently
And while they are at it, they can break up the unconstitutional Central Bank.


March 26th, 2013, 10:46 am
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Post Re: Who wants to break up big banks? The Senate, apparently
I'm torn on this one... I think that businesses should be able to contract as they see fit, but I can see where the failure of a bank that is "too large" could threaten our economy and our national security.


March 29th, 2013, 2:55 pm
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Post Re: Who wants to break up big banks? The Senate, apparently
It did with the big 3, why not the banks?

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March 31st, 2013, 11:19 am
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Post Re: Who wants to break up big banks? The Senate, apparently
Just pass a constitutional amendment that says the government is not allowed to bail out any private institution. Investors would force the banks to break themselves up then.


March 31st, 2013, 12:11 pm
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Post Re: Who wants to break up big banks? The Senate, apparently
Blueskies wrote:
Just pass a constitutional amendment that says the government is not allowed to bail out any private institution. Investors would force the banks to break themselves up then.


I disagree... Banks like Citi Group would still expand ridiculously, even under the watchful eye of their shareholders. No one knew that the Govt. was going to bail the banks out before they did, and they let Lehamn Brothers go out of business, yet they still grew and shattered.


March 31st, 2013, 12:19 pm
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Post Re: Who wants to break up big banks? The Senate, apparently
wjb21ndtown wrote:
Blueskies wrote:
Just pass a constitutional amendment that says the government is not allowed to bail out any private institution. Investors would force the banks to break themselves up then.


I disagree... Banks like Citi Group would still expand ridiculously, even under the watchful eye of their shareholders. No one knew that the Govt. was going to bail the banks out before they did, and they let Lehamn Brothers go out of business, yet they still grew and shattered.


I won't disagree that people pre-08 were blinded to risk. It was a bubble. Unfortunately, it happens from time to time. But now, there's an implied backstop behind the big institutions that, if things go bad again, they will simply be bailed out. This is a system of privatized gains and socialized losses, and it destroys the integrity of capitalism. If you aren't going to create a credible promise of no-bailouts, then you must heavily regulate the banks, turning them into de facto utilities.


March 31st, 2013, 12:29 pm
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Post Re: Who wants to break up big banks? The Senate, apparently
This guy, David Stockman, was a Representative from Michigan, and director of Reagan's budget during his first term. He has a book coming out called The Great Deformation, which is supposedly very anti-banks, government, etc. His solutions are as follows, though he freely admits they would never pass:

- Abolish deposit insurance, strangle the Fed and shrink the banks.
- Adopt a Super Glass-Steagall. Abolish bailouts.
- Eliminate the Electoral College and establish strict term limits.
- A balanced budget, eliminate economic subsidies, shrink the federal government.
- Impose a 30 percent tax on wealth to reduce debt to 30 percent of GDP (assumes a $10T tax on the top 10 percent — think Cyprus on steroids)
- Eliminate income taxes and replace it with consumption taxes.


March 31st, 2013, 12:35 pm
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