Break 'Em Up!

Great Britain, pressured by the Europeans in Brussels, is moving to force some of its biggest banks to downsize, by selling parts of themselves off. Hopefully, this will reduce the 'too-big-to-fail' syndrome in the future.

Britain and the United States developed similar banking systems over the
past two decades, both encouraging the evolution of giant firms that sought to
offer a range of financial services, from savings accounts to trading in
derivatives. But in the wake of last fall's financial crisis, Britain has moved
much more quickly and dramatically to reform its financial system. Its decision
to invest directly in its largest banks to help them weather the crisis set a
precedent for the U.S. bailout that followed.

Proponents of downsizing now are pushing the Obama administration to follow
Britain's example again.

One of President Obama's top outside economic advisers, former Fed
chairman Paul A. Volcker, has proposed a renewed separation between commercial
banking and investment banking. The Glass-Steagall Act, which forced banks to
choose between those businesses, was imposed during the Great Depression but
largely repealed in 1999.

Other prominent financial experts want the government to limit the size
of commercial banks, for example through penalties that would give smaller banks
a competitive advantage. Investors are already offering large banks much better
borrowing rates than their smaller rivals because they believe U.S. regulators
won't let the big firms fail.

The three largest U.S. banks, Bank of America, J.P. Morgan Chase and
Wells Fargo, together control about a third of the nation's deposits and are the
dominant providers of financial products including mortgage loans and credit
cards. All three companies also play major roles on Wall Street, investing and
helping companies raise money. Proponents of downsizing argue that such
behemoths can take outsize risks, knowing the government must catch them if they
fall.

This is one area where Obama is too closely tied to his banker campaign contributors. The advisors he chose are too closely tied to their friends in the financial sector. And yes, he is human, and therefore vulnerable to the normal political pressures that comes with our corrupt system of campaign financing.

As I've said numerous times before, BREAK 'EM UP!