WASHINGTON, D.C. — On the 10th anniversary of the Wall Street bailout, Congressman Brad Sherman (D-CA) and Senator Bernie Sanders (I-VT) announced their plan to reintroduce the Too Big to Fail, Too Big to Exist Act, in the House and Senate respectively. Under the legislation, any institution that is too big to fail will be broken up and reorganized to avoid more government bailouts and future risk to the economy.
Sherman introduced preliminary legislation in the House last week. Sanders will introduce more sophisticated legislation in the Senate this week. Sherman will introduce supplemental legislation in the House when it is back in session.
This is the fourth time Congressman Sherman has introduced similar legislation in the House, and the fourth time Senator Sanders has introduced such legislation in the Senate. The only thing that has changed is the biggest banks have gotten even bigger – 52 percent bigger than 2008.
“Today is especially important, as it marks the 10-year anniversary of the $700 billion Wall Street bailout becoming law. This reminds us that too big to fail should be too big to exist,” said Congressman Sherman who has advocated this position since 2009 and opposed the bailout. “Never again should a financial institution be able to demand a federal bailout. Today they can still claim: ‘if we go down, the economy is going down with us.’ By breaking up these institutions long before they face a crisis, we ensure a healthy financial system where medium-sized institutions can compete in the free market.”
Sherman continued, “Every financial institution should compete for funds based on the soundness of its balance sheet, and no financial institution should be able to claim that there is a special federal safety net available to its investors because of the institution’s sheer size.”
“If a bank is too big to fail, it is too big to exist,” Sanders said. “This is true not just because of the risk to our economy of another collapse and another bailout. It is also true because the current extreme concentration of ownership in the financial industry allows a very small number of huge financial institutions to have far too much economic and political power over this country.”
“Too Big to Fail” refers to any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.
See the discussion between Senator Sanders and Congressman Sherman at: www.facebook.com/CongressmanBradSherman/