Top Economists, Financial Experts and Bankers Say Giant Banks Are Hurting Economy
The Republican platform under Donald Trump called for restoring the Glass-Steagall separation between traditional depository banking and speculative investment banking. This would lead to the break up of the giant banks.
The New York Times explains:
The Republican Party platform calls for breaking up the large banks by restoring the New Deal-era Glass-Steagall Act, which required a separation of investment from commercial banking.
The People Want Them Broken Up
As Minneapolis Fed President Kaskari points out, a lot of the populist anger which got Donald Trump elected is based on allowing the too big to fail banks to survive:
Mr. Kashkari said he traced some of the nation’s current political anger and polarization to how the government responded to the financial crisis — which allowed large banks to survive while thousands of Americans struggled to keep their homes and find new jobs.
“The bailouts violated a core belief that has been handed down from generation to generation in our society that if you take a risk you bear the rewards and consequences of that risk,” he said. “We had to tear that up during the crisis because the biggest banks were going to fail and bring down the U.S. economy. And when you violate the core beliefs of society it does lead to anger and a feeling that this wasn’t fair.”
Indeed, the IMF has warned that bank bailouts were so unpopular, that a revolution could occur if more bailouts were given.
So Do Economists and Financial Experts
Economists and financial experts from across the political spectrum agree that we’ve got to rein in the “too big to fail” banks, including:
And the head of the New York Federal Reserve Bank – and former Goldman Sachs chief economist – William Dudley says that we should not tolerate a financial system in which certain financial institutions are deemed to be too big to fail.
Federal Reserve Board governor Daniel Tarullo also backs a cap on the size of banks, and Former Treasury secretary under Reagan and George H.W. Bush, Nicolas Brady, says that we need to put a cap on leverage.
Top Bankers Call for Big Banks to Be Broken Up
While you might assume that bankers themselves don’t want the giant banks to be broken up, many are in fact calling for a break up, including:
Why do so many top bankers, economists, financial experts and politicians say that the big banks should be broken up?
President Trump: To Kickstart the U.S. Economy, Break Up the Big Banks! was originally published on Washington's Blog