Fed President and Assistant Treasury Secretary Says What Everyone Knows: We Need to Break Up the Big Banks

Top Economists, Financial Experts and Bankers Say Giant Banks Are Hurting Economy

The President of the Federal Reserve Bank of Minneapolis – who oversaw the Troubled Asset Relief Program (TARP) as Assistant Secretary of the Treasury for Financial Stability (Neel Kashkari) – says that the nation’s biggest banks remain too big to fail and pose significant risk to the economy

Kashkari joins the following top economists and financial experts who believe that the failure to rein in the “too big to fail” banks is unacceptable:

  • Current Vice Chair and director of the Federal Deposit Insurance Corporation – and former 20-year President of the Federal Reserve Bank of Kansas City – Thomas Hoenig (and see this)
  • Former Federal Reserve Bank of New York economist and Salomon Brothers vice chairman, Henry Kaufman
  • Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
  • President of the Federal Reserve Bank of St. Louis, James Bullard
  • The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
  • Economics professor and senior regulator during the S & L crisis, William K. Black
  • Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales
  • The Director of Research at the Federal Reserve Bank of Dallas, Harvey Rosenblum
  • Director, Max Planck Institute for Research on Collective Goods, Bonn, and Professor of Economics, University of Bonn, Martin Hellwig

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:

  • Former managing director of Goldman Sachs – and head of the international analytics group at Bear Stearns in London- Nomi Prins
  • Numerous other bankers within the mega-banks (see this, for example)
  • Founder and chairman of Signature Bank, Scott Shay
  • Former Natwest and Schroders investment banker, Philip Augar
  • The President of the Independent Community Bankers of America, Camden Fine

Why do so many top bankers, economists, financial experts and politicians say that the big banks should be broken up?

Because they’re no longer acting like banks, and are destroying the economy.

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  • Don Robertson

    “Because they’re no longer acting like banks, and are destroying the economy.”

    The whole concept of Too Big To Fail is disinegenuous. They’re not too big to fail. They are ongoing failures, complete economic disasters. But treating them like they are too big to fail has given legions of nincompoop bankers sinecure jobs as bureaucrats, quasi-government flunkies that flub through life without a care in the world doing absolutely nothing productive.

    Trillions have been dumped into the TBTF banks to keep them alfoat. This vast amount of bureaucratic wealth usurpation is draining the depths of the economic wealth in this country.

    Let them fail. Their failure will provide a vast new landscape of near endless economic opportunities.

    • ahuxley

      Thanks for that.

  • truthtime

    Then do it already. Enough of this can kicking. Arrest/Break the offending banks. Nationalize Central Banks. Countries should be following the Iceland model, but prefer to can-kick all day, every day. NIRP, IMF, and the ludicrous idea of ‘solving debt’ with more debt.

    And for those that still have your money in a Bank connected to these scum Central Bankers, get your money out NOW and put it in a Credit Union, State Run Bank, or other Community-type bank.

  • jadan

    The Fed cabal knows it has failed and is trying to self-correct before Bernie Sanders puts them under public scrutiny.

    • kimyo

      will this be the same sort of scrutiny he applied when he was chair of veterans affairs?

      he could have subpeona’d any of the dozens of cheating v.a. officials and remedied the situation forthright 2+ years ago. as of september, there are still 600,000 waiting for appointments.

      if his words don’t make you weep for america you’ve lost any sense of perspective:

      “The point I want to make is that when you are dealing with 200,000 people, if you did better than any other health institution in the world, there would be thousands of people every single day who would say ‘I don’t like what I’m getting.’

      blaming the victims. those words could have come right out of snyder’s office/orifice.

      sanders misjudged, badly, and it will lose him the election. trump will eviscerate him on his v.a. failure.

  • If such banks were “too big to fail”, then during a banking crisis, such banks would be sound and not in need of bailouts.

    Either such banks are not big enough or all banks are susceptible to failure if their structured reserves fail to meet obligation coming due each day.

    Rightly, the phrase should be too politically connected for shareholders and bondholders to lose (TPCSBL).

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