Call It Socialism

Call It Socialism
By Antony Currie and Rob Cox | NY Times

Here’s a shocker: Bernie Sanders of Vermont, the only self-described socialist in the Senate, has put forth the most capitalistic proposal yet for banking reform. The senator’s Too Big to Fail, Too Big to Exist Act proposes that if a firm is so big that its failure would threaten the economy or financial system, it should be broken up, not protected by the promise of a bailout.

That sounds simple and logical, yet none of the competing proposals floating around Capitol Hill — those from the White House or the House Financial Services Committee, or others expected this week from Christopher Dodd, the Senate Banking Committee chairman — have been so explicit in calling for an end to government rescues for private companies.

Of course, Senator Sanders’s bill is intended to be provocative. In two pages it outlines sweeping powers for the Treasury secretary to identify banks, hedge funds and insurers that are too big to fail. Read more.

Take Sen. Sanders poll on Wall Street. What do you think?

Sign the Petition to Treasury Secretary Timothy Geithner. Here's part of the text:

Too Big to Fail is Too Big to Exist

Financial institutions that are “too big to fail” played a major role in undermining the American economy and driving our country into a severe recession.

Financial institutions that are “too big to fail” put taxpayers on the hook for a $700 billion bailout and more than $2 trillion from the Federal Reserve in virtually zero interest loans.

Huge financial institutions have become so big that the four largest banks in America (JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup) now issue one out of every two mortgages; two out of three credit cards; and hold $4 out of every $10 in bank deposits in the country.

Just five banks in America (JP Morgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley) own a staggering 95% of the $290 trillion in derivatives held at commercial banks. Derivatives are risky side bets made by Wall Street gamblers that led to the $182 billion bailout of AIG, the $29 billion bailout that allowed JP Morgan Chase to acquire Bear Stearns, and the collapse of Lehman Brothers.

The concentration of ownership in the financial services industry has resulted in higher bank fees and interest rates that consumers are forced to pay for credit cards, mortgages and other financial products. Read more, sign the petition.

Read both pages of Sen. Sanders' proposed legislation.