Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.
Wall Street banks sparked the financial crisis in 2008 and were rescued by the federal government. Congress passed the Dodd-Frank Wall Street Reform Act in 2010, but many of its rules have yet to take effect and banks are even bigger today than they were before the crisis. They are also just as scandalous, as financial institutions have faced lawsuits over mortgage and foreclosure fraud, money laundering, interest rate-rigging, and other practices. That, Brown said Thursday, should drive lawmakers to learn from past mistakes and break up the big banks to protect the health of the American economy:
BROWN: In the last five years alone we have seen faulty mortgage-related securities; foreclosure fraud; big losses from risky trading; money laundering; and Libor rate rigging. [...]
How many more scandals will it take before we acknowledge that we can’t rely on regulators to prevent subprime lending, dangerous derivatives, risky proprietary trading, and even fraud and manipulation?
Wall Street has been allowed to run wild for years. We simply cannot wait any longer for regulators to act. These institutions are too big to manage, they are too big to regulate, and they are surely still too big to fail.
Two decades ago, the six largest Wall Street banks held assets worth just 16 percent of the American economy, Brown said. They now hold assets worth more than 60 percent of the total economy:
Brown has emerged as a leading critic of Too Big To Fail in the Senate, and his efforts have attracted bipartisan support. Louisiana Sen. David Vitter (R) joined Brown’s call for action on the Senate floor today, and Iowa Sen. Chuck Grassley (R) has ripped big banks for holding a “get out of jail free card” and, with Brown, has urged the Department of Justice to prosecute large banks for fraudulent practices.