Last night the Democrats dropped a very aggressive financial reform amendment that would force the breakup of big banks.
The American Prospect’s Tim Fernholz has a great interview with Senator Ted Kaufman, one of the Senate’s leading anti-Wall Street gadflies.
You and Senator Sherrod Brown have proposed an amendment that would cap the size of the largest banks and, in effect, break them up. How do you sell this to people who are leery of what seems like a radical move?
First off, we’ve broken up things before. We broke up Standard Oil, we broke up AT&T, we broke up the accountants, too. A lot of the changes we’re talking about, the mergers, are just new. When you look at the reasons these banks are so big — and you know how big they are — remember the reason JP Morgan Chase is so big is because they bought Washington Mutual when it was in trouble, and Wells Fargo bought Wachovia, and Bank of America bought Merrill Lynch [during the crisis]. It is pretty straightforward, now that these are back on their feet, that it makes sense to break them up.
The real thing that we have to do here is make sure we don’t have institutions that are too big to fail.
These things are massive, some of them are over 2 trillion in assets, [and] trying to resolve them [if they fail] will be very, very difficult.