Weekend Economists Escape to Cuba March 15-17, 2013

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21. Break Up the Behemoth Banks

http://www.commondreams.org/view/2013/03/15-11

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Senator Brown explains, “The four largest behemoths, now ranging from $1.4 trillion to $2.3 trillion in assets, are the result of thirty-seven banks merging thirty-three times. In 1995, the six biggest US banks had assets equal to 18 percent of GDP. Today, they are about 63 percent of GDP.”

In earlier eras, such a gross distortion of the economy would have prompted popular outrage, political campaigns for reform, then government legislation. In our time, the outrage is plentiful, but the political system is dead in the water. Despite the vast destruction produced by the concentrated banking system, neither party wants to embrace the remedy Brown proposes.

The Dodd-Frank reform law of 2010, incomplete though it was, has been utterly stymied by the billion-dollar lobbying campaign of the financial sector. Nearly three years later, fewer than half of the regulations needed to implement Dodd-Frank have been completed. The president’s proud boast that the law put an end to “too big to fail” banks has been twisted into Wall Street’s sick little inside joke.

“It’s not just the economic power these guys have, it’s the political power,” Brown says. “The inability to get these new rules in place is the result of these lobbying pressures from Wall Street.”