House And Senate Democrats Introduce Bill That Would Force The Nation’s Four Biggest Banks To Shrink
"House And Senate Democrats Introduce Bill That Would Force The Nation’s Four Biggest Banks To Shrink"
The same week that JP Morgan Chase announced it lost $2 billion on a risky trade, Democrats in both the House and Senate have introduced measures that would force the nation’s four biggest banks — JP Morgan among them — to shrink. The bill, proposed by Sen. Sherrod Brown (D-OH) and Reps. Brad Miller (D-NC) and Keith Ellison (D-MN), would cap the percentage of the nation’s deposits that any one bank can hold:
Under the proposals, a single bank could not hold more than 10 percent of the nation’s banking deposits, nor take on more than 10 percent of the banking system’s liabilities. Banks could take on no more than $1.3 trillion, or 2 percent of the nation’s gross domestic product, in non-deposit liabilities. Non-banks could not take on more than three percent of GDP in liabilities, and could not grow larger than $436 billion.
Four existing banks — JPMorgan Chase, Bank of America, Citigroup and Wells Fargo — are currently above the size cap, and would need to be shrunk down if the bill became law, according to Miller’s office.
“The gigantic size of megabanks, and the perception in the marketplace that they are too big for the government ever to permit to fail, gives them an unfair competitive advantage over smaller financial institutions that distorts the market and discourages competition.” said Miller. “As our nation’s economy begins to recover, we must ensure that megabanks cannot take the same kind of risks that hurt so many of our nation’s families and small businesses,” Brown added. “That’s why we need to place sensible size limits on our nation’s large financial institutions and ensure that if banks gamble, they have the resources to cover their losses.”