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Liberal Democracy

Liberal Democracy
The Free State

Thursday, July 26, 2012

Ex-Citi Chief: Split Up Big Banks: How to End Too Big to Fail



I agree its easy to say its time to break up big banks when a bank you use to run, is now not nearly as big as it use to be. And if anything you had a role making that company smaller like in the case of Citi Group but whether this is something that should've been done 3-4 years or ago or should be done today. We need to do this, we can't afford Too Big to Fail, where we have banks that are so large and so important to our economy, that if somehow they were to fall or fail. They can drag our economy with them, which is exactly what happened in 2008 and a big reason for the "Great Recession". That we are still trying to recover from that we are just a couple of months away from the four year anniversary of. Too Big to Fail is simply unaffordable which is why we need more competition in our Banking Industry, more Local Banks, I would argue State Banks even and even National Banks. As long as they aren't so big that they can bring down the economy when they fail. Meaning when a bank goes down, goes bankrupt or goes out of business, it would only effect the people who work there and their families and customers, which is bad enough. But it won't bring down the rest of the economy as well, like in 2008.

So what we should be doing is having more banks in this country, not nationalizing big banks. Which is what Progressives have been calling for but breaking them up the ones that are too big to fail, we also need more Community Banks and I would argue even Public Banks. So the States can set up their own banks that residents wouldn't be forced to do business with them but they would have that option. Of doing business with a Non Profit Bank that wouldn't be a monopoly but an option for people to do their banking with. They could even put some of their money in a State Bank and some of their other money in a National Bank thats private and could see for themselves. Which is a better bank for them and their families, as well as putting some money in a Community Bank and having a menu of options in how they do their banking. Which would be a hell of a lot better then Too Big to Fail.

You breakup Too Big to Fail Banks and we wouldn't have to create a National Bankruptcy Insurance System, that banks of a certain size would've been force to pay into. That they could collect from when they are in the danger of going under, which was considered back in 2010 as part of Dodd-Frank Wall Street Reform. We could just have a system or more banks and competition, instead of Too Big to Fail.