Warren: It’s time to break up too-big-to-fail banks

by MPA16 Apr 2015
U.S. Senator Elizabeth Warren has called on lawmakers to break up too-big-to-fail by capping the size of the largest financial institutions and separating commercial and investment banking. She also proposed limiting emergency lending by the Federal Reserve to troubled institutions by the Federal Reserve.

Speaking at the Levy Institute’s 24th annual Hyman Minsky conference, Warren said the fact that the Federal Reserve and the Federal Deposit Insurance Corp. say 11 banks threaten the entire U.S. economy means they are too big.

"Too much reliance on a technocratic approach also directly plays into the hands of the big banks," Warren said, since government regulations against banks can get diluted in favor of the big financial institutions. "Big banks can always throw more lawyers at a problem than the government can."

In fact, last week Warren revealed that during a meeting with JPMorgan Chase’s CEO, Jamie Dimon told her to “Hit me with a fine. We can afford it.”

In her speech, she said regulators have fostered a “slap on the wrist” culture for big banks. "When small banks break the law, their regulators do not hesitate to shut down the banks, toss their executives in jail and put their employees out of work.”

Warren also said simply adding more regulations won’t solve the problem as it adds to the regulatory burden of smaller financial institutions, which could be an effective argument for breaking up big banks against Republicans, like Senate Majority Leader Mitch McConnell, who has said Dodd-Frank has hurt smaller banks, according to The National Journal.


  • by Dominick Samnarone | 4/16/2015 10:00:22 AM

    I can't stand the "too big to fail" banking cartel. I dislike big controlling government talking about "breaking up big banking corporations"

    I wish Americans were smart enough to know NOT to do business with bad businesses. These banks have all paid fines for breaking the law without blinking an eye. Chase actually had a smirk on there face. Unlike credit unions banks don't have to answer to their customers so there's no transparency.

    The biggest enemy of the banks are smart people. Smart people join credit unions and become members, not customers. There is full disclosure and transparency to its members in a credit union.

  • by Carl hoelscher | 4/16/2015 10:03:45 AM

    It is about time. Are the rest of our elected officials cowards? The way they let the financial system control the world is criminal.

  • by Mortgage Guy | 4/16/2015 3:17:35 PM

    Warren is absolutely correct. The big banks need to be broken up. We just need to make sure this happens in an organized process to minimize disruption in financial matters. I am sure money from Citizens United will fight this like nobody's business. I hear complaints from friends at Regional Banks about things they have to do to comply with Dodd Frank and they are a minor problem, but the economy is a safer place due to Dodd Frank.
    I thought my business would suffer from Dodd Frank, but once it got the crooks out of the business all was well.

    This is just too much risk in one place for the US Economy!


Should CFPB have more supervision over credit agencies?