Tags: bernie sanders | jp morgan | berkshire

Bernie Sanders Pushes to Break Up JP Morgan, Berkshire, Other Financial Titans

Senator Bernie Sanders looking ahead with american flag in background

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By    |   Wednesday, 03 October 2018 01:18 PM

Democratic Senator Bernie Sanders introduced a bill on Wednesday that would require the breakup of any financial company that has a total exposure of greater than 3 percent of gross domestic product.

Based on that threshold, which is $584 billion, six banks and the four nonbanks would have to split up until bill unveiled by the Vermont independent and former presidential candidate, CNBC reported.

The banks are J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs and Morgan Stanley. The nonbanks are Berkshire Hathaway as well as Prudential Financial, MetLife and American International Group.

The bill is co-sponsored in the House by California Democrat Rep. Brad Sherman.

Today the six largest banks in America control assets equivalent to more than half the country’s GDP and the four largest banks are on average about 80 percent larger today than they were before the bailout. The legislation introduced Wednesday would cap the size of the largest financial institutions so that a company’s total exposure is no more than 3 percent of GDP, about $584 billion today.  

By applying a cap on the size of financial institutions, the bill would break up the six largest banks in the country: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley. The bill would also address large non-bank financial service companies such ase Prudential, MetLife and AIG.

“No financial institution should be so large that its failure would cause catastrophic risk to millions of Americans or to our nation’s economic well being,” Sanders, an Independent from Vermont, said. “We must end, once and for all, the scheme that is nothing more than a free insurance policy for Wall Street: the policy of ‘too big to fail.’”

“Too big to fail should be too big to exist,” said Sherman, who has advocated this position since 2009.  “Never again should a financial institution be able to demand a federal bailout.  Today they can 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.”

In the 10 years since Wall Street caused the financial crisis and was bailed out by taxpayers, the five largest banks have raked in more than $583 billion in profits. The six biggest banks have a combined total exposure of over $13 trillion which exceeds 68 percent of our nation’s GDP.

Under the bill, entities that exceed the 3 percent cap would be given two years to restructure until they are no longer too-big-to-fail. These “Too Big to Exist” institutions would no longer be eligible for a taxpayer bailout from the Federal Reserve and could not use customers’ bank deposits to speculate on derivatives or other risky financial activities.

As a result, JPMorgan Chase and Bank of America would be forced to shrink to where the banks were in 1998.  Wells Fargo would go down in size to where it was in 2005. And Citigroup would shrink to where it was during the second term of Bill Clinton’s administration.

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Democratic Senator Bernie Sanders introduced a bill on Wednesday that would require the breakup of any financial company that has a total exposure of greater than 3 percent of gross domestic product.
bernie sanders, jp morgan, berkshire
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2018-18-03
Wednesday, 03 October 2018 01:18 PM
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