Senator Bernie Sanders (D-VT) introduced legislation that would break up the biggest U.S. banking and financial institutions. The bill is sponsored in the U.S. House of Representatives by Representative Brad Sherman (D-CA).
The bill, titled the Too Big to Fail, Too Big to Exist Act, would, among other things, require:
- the restructuring of certain covered financial institutions (including banking organizations, insurance firms, broker-dealers and investment advisers) with a total exposure greater than three percent of the GDP of the U.S.;
- insurance companies with more than $50 billion in assets to report total exposure to federal financial regulators; and
- the Federal Reserve Board Vice Chair of Supervision and the Financial Stability Oversight Council to submit written reports on the status of financially significant institutions.
Entities that exceed the three percent cap (i.e., “too big to fail” institutions) would be given two years to restructure. According to the bill, these “too big to exist” institutions would not be eligible for a taxpayer bailout from the Federal Reserve Board and could not use customers’ bank deposits to engage in “risky financial activities.”
Lofchie Comment: Like some Cabinet newsletters, nice title, not much substance.