Those with any ability to assess facts and figures objectively and honestly over the past 7 years have repeatedly noted that “too big to fail” banks have only grown bigger and more concentrated in their economic risk since the government bailouts rescued them from much deserved bankruptcy in 2008.
Elizabeth Warren has been patiently and relentlessly advancing the obvious case that they need to be broken up and forced into Glass-Steagall-like divisions once more. She explained the case well in this clip with Al Hunt last January. She also put the facts to Fed Chair Yellen in the latest Senate hearing (see video clip here) where Warren pointed out that the Fed is mandated, not given discretion but mandated, to reorganize the banks where the banks themselves are unable to show that their demise would not require a government bailout to protect the economy.
The banks have failed to advance such a viable plan as required every year since 2008 and the Fed has done nothing but extend, pretend, condone and continue piling trillions of government backed funds into the bottomless well of bank coffers as executives extract garish compensation courtesy of the public purse. Finally amid increasing political embarrassment, yesterday the FED and FDIC issued long-overdue failing grades to the banks and directed them to take immediate action to make their holding companies easier to dismantle before their next round of annual filings in 2015.
What happens next is anyone’s guess. What we know for sure is that the banks are only focused on getting bigger since that is how their executives are directed through financial incentives. And they are already far to big to manage or resolve without catastrophe. The only reasonable solution is to break them up. The question is how much longer can they stall.
The Federal Reserve and Federal Deposit Insurance Corp. told 11 of the largest U.S. and foreign banks, including JPMorgan and Goldman Sachs, that they botched their so-called living wills. Here is a direct video link.
Paul Miller, a banking analyst at FBR Capital Markets, discusses the Fed and FDIC telling 11 of the largest U.S. and foreign banks that they botched their so-called living wills. Here is a direct video link.