Until we restore Glass-Steagall, more big bank bailouts are inevitable

Either we break up the big banks or the big banks break us

Attorney General Eric Holder made actual some news this week amid the GOP’s scandal frenzy: he told the House Judiciary committee that big banks are not too big too jail. He was willing to criminally prosecute the nation’s largest banks, though he hasn’t done so since the financial crisis.

“Let me be very, very, very clear… banks are not too big to jail,” Holder added.

This is a small relief because the fact remains that the big banks are bigger than ever, much bigger than they were when they were able to prevent the decent reforms that followed the financial crisis to take the the crucial step of breaking up the big banks.

Since the 1930s, Glass-Steagall prevented another depression by separating investment and commercial banks by law. In 1999, conservatives passed and Bill Clinton signed a repeal of this crucial New Deal reform. You know what happened less than a decade later.

Not restoring Glass-Steagall after the financial crisis is like sending the Space Shuttle up with the same flawed O-rings the Challenger had.

Despite the fact that a bipartisan bill from Sherrod Brown and David Vitter would force the banks to maintain much more reasonable level of capital has been introduced, this issue is far off the radar of most politicians except Brown, Vitter and Elizabeth Warren. And it will be until another bank bailout becomes inevitable and then it will be too late.

This is an issue the middle class has to become obsessed with and not just because the big banks are getting an $83 billion implied taxpayer subsidy5724199424_1b43dc1c0a — and not because another crisis will lead to trillions more in debt that the right will use to justify gutting our social safety net. The fact that we cannot fix this glaring injustice, this obvious flaw in our economy, is the worst symptom of a sick political system.

We will win this fight. The question is will we win it before or after we have to bail out the big banks again.

I hope you’ll share this video above and remind people what a real scandal looks like.

[Photo by David_Shankbone via Flickr]
  • dkmich

    Economic justice and rule of law are the only two things that matter. God, guns, gays, immigration – none of that matters. None only did they steal all of the money, they stole our homes, jobs, savings, schools, and communities. Warren is one tough cookie and just what we need 50 more of.

  • tz

    I don’t even blame the banks. They are like dogs, they just do what they do. It is up to the owners to control them.
    I guess this is dependent on who owns the USA, the voters or the plutocrats.
    Bring back Glass Stegal!

  • The US govt caused the problem with sub-prime loans which lead to the the bank bailouts because the banks knew they’d be bailed out. If the government wouldn’t interfere and let bad business fail, these bad business practices which lead to the destruction of our economy would go away.

    • http://eclectablog.com Eclectablog

      Taking the entire world economy down with them, of course. That was never an option.

  • http://twitter.com/SwitchYourBank Too Big Has Failed

    Thanks for posting our compilation video about breaking up the banks on this blog. We appreciate the share. http://TooBigHasFailed.org

  • http://stock-index-options-alert.blogspot.com/ Tom Chechatka

    All well and good the process reform that is Glass-Steagall be vigorously pursued, however this reform does not address the decades running under-investment in the means by which economies thrive and naturally create opportunities that translate not merely into “jobs,” but careers in professions advancing the physical state–the posterity–of all humanity. That’s why Elizabeth Warren’s first bill as a U.S. Senator, S.897, submitted on May 8, 2013 is vital as a form of necessary conceptual consideration turned practical policy. Hers represents the means by which the invaluable contribution Alexander Hamilton wrought all humanity becomes our generation’s practical reality: a credit system financing the advancement of humanity through investment in its capabilities to increase its harmonious dominion over nature.

  • Pingback: The Polish Gazette - "Middle Class Has to Become Obsessed" With Passage of Glass-Steagall()

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