Who Wants To Break Up The Big Banks?

By Simon Johnson

Correction: The American Banker slideshow on “Who Else Wants to Break Up the Big Banks“, to which I referred last week, is not behind a paywall.

Thanks to American Banker for making this content freely available.

(If you prefer to see an address before clicking on it: http://www.americanbanker.com/gallery/too-big-too-fail-breaking-up-big-banks-1048735-1.html)

48 responses to “Who Wants To Break Up The Big Banks?

  1. Have we reached Peak Oligarchy yet?

  2. Are we there, yet? LOL

    Break em all up, they’re nothing but ZOMBIES!! HA!!

  3. In response to the subject, well, me for one…

  4. Phil Giudice

    Let’s set a ratio of amount of capital required to be on hand in a bank directly proportional to their global market share. As a bank gets materially bigger they’ll be required to become progressively less leveraged. Smaller banks will be able to be more leveraged than big banks so the best and the brightest will move away from bigger banks where their degree to innovate are more constrained than the smaller banks. A self correcting cycle, Seems a lot easier to implement than breaking up big banks.

  5. I’m long on pitchforks!

  6. markets.aurelius

    HSBC now (old news actually, since it’s been going on for years!)

    http://online.wsj.com/article/SB10001424052702303754904577532633575159476.html

    Wow! This is just becoming hilarious. Senate Banking Committee no less …

    First you laugh. Then you just keep laughing.

  7. Its not really work, its just the power to talk. SBC

  8. headaches for JP Morgan Chase and Jaime Dimon:

    http://www.huffingtonpost.com/2012/08/09/jpmorgan-chase-libor-subpoenas_n_1760015.html

    Couldn’t happen to a nicer bank.

  9. Maybe we should worry about Big Mail (which, under the Private Express Statutes, is a legal monopoly)

    ‘http://seattletimes.nwsource.com/html/politics/2018882130_apuspostalproblems.html’

    ‘The nearly bankrupt U.S. Postal Service on Thursday reported losses of $57 million per day in the last quarter and warned it will miss another payment due to the U.S. Treasury, just one week after its first-ever default on a payment for future retiree health benefits.’

  10. One of the great aspects of American life over a long period of time has been the US POSTAL SERVICE. It’s something that defined America, and added to its’ greatness.

    NOw, that the Postal Service has been experiencing financial difficulties, every conservative out there is beating up on it, and calling for its’ privatization, which is the real name of the game.

    Congress needs to step up and realize what a national treasure and asset the US POSTAL Service has been, and continues to be

    We don’t need another rich man’s scheme to turn this into a privately owned business.

  11. Maybe Congress should not impose pension prefunding mandates on the Postal Service that make little sense.

  12. ‘Congress needs to step up and realize what a national treasure and asset the US POSTAL Service has been, and continues to be….’

    JP Morgan Chase made $5 billion last quarter and the USPS lost about the same, but it’s the latter that is a ‘national treasure’?

  13. ‘Maybe Congress should not impose pension prefunding mandates on the Postal Service that make little sense.’

    Yeah, just let the taxpayers pick it up. Great idea.

  14. You certainly are barking up the wrong tree comparing Chase bank to an honest organization such as the US POSTAL SERVICE, a pillar of our formulations from childhood as to what it means to be an AMERICAN.

  15. No, Patrick, that’s not what I’m saying. I’m referring to the 2006 Postal Accountability and Enhancement Act of 2006, which required the USPS to prefund 75 years of their retirement benefit program on a 10-year schedule, something no private company is required to do. Apparently Congress in 2006 thought that the USPS would be gone by 2016 and that taxpayers would be stuck with the bill for all the retirees? Great idea. The end result is the same: retirees that the government has to pick up. Except that with the PAEA, the USPS is definitely killed sooner than later.

  16. I think you’re a little confused, Oregano. The USPS had accumulated $75 billion of unfunded liabilities for the period 2006-15. The Reform of 2006 was making an attempt to fund those with a rate increase that was supposed to be devoted to that end.

    I mean, they have a legal monopoly on the delivery of first class mail and they still can’t even break even. All over the world, Europe, Asia, New Zealand govts. have finally had enough to mail monopolies. It was long overdue here. It’s a dinosaur industry.

  17. Oh yeah, remember the Fabrice scandal? SEC says, ‘Nevermind’.

    http://seattletimes.nwsource.com/html/businesstechnology/2018887017_goldmansachs10.html

    ‘Goldman Sachs has disclosed it was cleared of wrongdoing after an investigation into a $1.3 billion subprime-mortgage deal, a surprising victory for the bank.

    ‘The Securities and Exchange Commission’s decision to forgo action is an about-face for the regulator.’

    Next humiliation; LIBOR.

  18. Perhaps I am, and perhaps others are casting the funding issue in overly sensationalist terms, but I’m not sure I agree with your characterization of the problem. The act of 2006 changed the USPS retirement program from a pay-as-you-go system to a prefunded system, and mandated the rapid creation of a $150B retiree health benefits fund over the period 2006-2016 to meet obligations commencing in 2017 (Congressional Research Service Report 40768, 2009). USPS has maintained that $90B is a more realistic number, and the PRC suggests that the number is somewhere in between because the number of UPS retirees has been overestimated in the original bill but the inflation rate for health care costs has been underestimated in the USPS claim. Since 2009 the economy has blown holes in both early assumptions, and in any case I agree that the USPS is a dinosaur on its way to extinction.
    I would also note that the >500,000 member USPS union would disappear as well.

  19. But political satire has never been so good! DON’T STOP NOW POLITICIANS! WE’RE JUST GETTING STARTED!

  20. @Oregano – wow, Homeland Insecurity’s over-paid spying-on-neighbor babushkas are going to deliver the mail….? Like no one can see the “redistribution” going on among the predators. I’m with Bond Man. I doubt the under-paid and over worked “private” carriers will defend your mail the way the post office did when a parcel was sent “registered”.

    Like Global Crime Inc. won’t get involved! Look how quickly identity theft blossomed when the internet was forced on everyone…

    Epic situation setting up in this latest go-round of manufactured depressions – funny how depressions never go the way of the dinosaur….

  21. ‘…when the internet was forced on everyone…’

    Oh, that’s why you come here, Annie. You’re tied up in your basement and the mafia is forcing you to make these ridiculous posts. Zounds! Should have seen it before.

  22. Annie, I supposed you’re referring to my comment about the USPS being a dinosaur? I’m not happy with the death spiral of the USPS, either; for some small communities it’s the only way to get physical communiques as they’re not profitable for the major logistics players. It’s just that as the country becomes more and more connected via the internet, the USPS’s traditional services are being replaced. Until everyone in the country has a 4G smartphone and cell service, though, it won’t completely vanish.
    The Post serves a useful function in all democracies, but in every country that I’ve been in the Post it has evolved to do much more than just deliver mail. In Japan, for example, it’s also a bank…

  23. Hard copy mail isn’t going away; one billion of the five billion quarterly loss was operational deficit, the rest payments mandated by a bought Congress.

    Congress deliberately strapped the Postal Service with unrealistic dictates regarding pre-funding retiree health benefits seven decades out, hoping to cripple it.

    This is clearly evidence of a conspiracy to kill the post office and turn it over to the elites who want to own everything of value, even where this leads to a vastly shrinking commonwealth.

    If you want to have a real country, some things are worth saving, such as the postal service. If you want to live in a corporatized state, or a fascist state, continue down this road to perdition.

  24. ‘If you want to have a real country, some things are worth saving, such as the postal service. If you want to live in a corporatized state, or a fascist state, continue down this road to perdition.’

    But, a quasi-govt agency with a legal prohibition of anyone competing against it, like the USPS, isn’t fascism? The definition of which (by its founder) being, ‘All within the state, nothing outside the state, nothing against the state.’

    If you’re truly opposed to fascism you would be in favor of completely privatizing the business of the movement of pieces of paper from one point to another. That is, allowing competition.

  25. “Congress deliberately strapped the Postal Service with unrealistic dictates regarding pre-funding retiree health benefits seven decades out, hoping to cripple it.”
    Yup. And one of the last big unions supplying reliably Democratic campaign funds. Hate being cynical, but I wonder if this is the bigger prize.

  26. I would be in favor of a totally private postal system with a mandate to serve all citizens of the country; that’s the communication and commerce function of a postal system. The function of a FedEx or UPS is to deliver goods and communications where it can make a profit. If we can take the expanding use of vote-by-mail as an example – this scheme relies on the existence of a reliable, inexpensive, and universal delivery system to allow citizens to exercise their voting rights without unreasonable impediment and save election costs. If there is no delivery service to a particular area, the voters in that area are disenfranchised; in effect, a poll tax is imposed.
    Remove the non-compete restriction, sure; but there has to be a guaranteed universality of service for the proper functioning of the democracy. That may be some level of subsidization.

  27. You are proof, Paddy, that the “competition” for being the biggest, hairiest, most dumbed-down Randist in the world is not actually needed for progressive and sustainable commerce based on the GOVERNMENT PROTECTED FREEDOM that every human being has to make their lives less miserable through honest work.

    On the other hand, your BORING inanity sure is making the “competitive” ancient gene juice percolate happily in my veins in anticipation of that “Just War” that always follows a bankster depression – it’s a pleasure beyond sex and chocolate and a trillion TARP $$$$s for shoe shopping to finally get to shut up a pompous neanderthal-troglodyte Crusader with an equal and opposite brute force….see? Who says I’m not capable of being cheerful?

    @oregano, “…Until everyone in the country has a 4G smartphone and cell service, though, it won’t completely vanish….”

    Yeah, I’m still working on the app for the smartphone where all you have to do is wave the dirty diaper in front of the magic phone and the diaper is cleaned via nanobots. Only then will you not need a parcel delivery system…but shouldn’t we be further along in modernizing the infrastructure for that majik day of total app world in 2016…?

  28. @Annie, true enough for parcel deliveries, which the USPS is still doing and trying to emphasize over 1st class and bulk mail, which is the dying portion of their business owing to electronic media. Parcel delivery is a bit different than delivery of voter information packets and vote-by-mail packages (or “greetings” and other essential government communications). That part of the market is well served by the UPS and FedEx guys. As long as we need to deliver important communications via physical media the Post Office or some sort of mandated universal service needs to exist in its current form. And that’ll be a long time.

  29. Sullivan wrote: “If you’re truly opposed to fascism you would be in favor of completely privatizing the business of the movement of pieces of paper from one point to another. That is, allowing competition.”

    Moving mail, that is, a function of commerce, in part, is inherently governmental functioning.

    Privatization, again, is a SCAM to turn commonwealth assets over to a select elite, who normally can’t be satisfied by merely being billionaires.
    They’re the equivalent of crack addicts.

    Paddy, we’re going to fight you every inch of the way, as yours is the philosophy of nihilism to a brimming new nadir.

  30. ‘Moving mail, that is, a function of commerce, in part, is inherently governmental functioning.’

    Why? We move all kinds of things, food, clothing and other necessities of life quite competently without the government doing it for us…or even commanding us to do it.

    Btw, for you ‘universalists’, we have banking for everyone who wants it, even people who live in rural areas.

  31. ‘…yours is the philosophy of nihilism to a brimming new nadir.’

    That word doesn’t mean what you think it does.

  32. ‘If we can take the expanding use of vote-by-mail as an example…’

    Oh, how did we ever survive before we had it?

    ‘– this scheme relies on the existence of a reliable, inexpensive, and universal delivery system to allow citizens to exercise their voting rights without unreasonable impediment and save election costs. ‘

    You don’t live in a state where they have vote by mail, do you? Here in Washington they keep losing ballots and re-discovering them if the Democrat is losing. But, even if your claim is true the election supervisors could simply subsidize the use of a private mail system. Sorta like food stamps are used in private grocery stores.

    ‘If there is no delivery service to a particular area, the voters in that area are disenfranchised; in effect, a poll tax is imposed.’

    The Iowa caucuses are a poll tax?

  33. Paddy, nadir or nihilism, you encompass both.

  34. I do live in a vote-by-mail state, Patrick, and it seems to have worked out rather well. Read my posts carefully, I’m saying the same thing you are…it’s OK if the Postal System is private, as long as it is mandated (and funded as appropriate) to serve all citizens, not just those that are profitable to serve.

    If a state with direct vote primaries replaced its direct vote primaries with caucuses there would be a lot of debate about the hardship it would impose on those removed from the caucus site, and this is a consistent complaint lodged against Iowa’s caucus primary process. Definitely if the general elections were replaced by caucuses this would likely be challenged in as an undue hardship and a disenfranchisement of remotely located voters. The history of court and legislative actions over the past century have been towards the expansion of franchise and the striking down of laws restricting the physical exercise of franchise. Vote-by-mail removes nearly all restrictions on the physical ability to exercise one’s right to vote save a 44 cent stamp, which is far less than the cost of transportation to a voting place.

  35. Leave it to fascists and wingnuts to savage and dismantle anything that works in the people’s best interest. 17 trillion funneled to the offshore bank accounts of the den of vipers and thieves on wallstreet and not a peep. You do the math, and get back to me with what is worth saving and what is worth valuing. TBTF criminal cartels involved in systemic criminal activity – bribing – I mean purchasing regulators, and the socalled government, raping and pillaging their fellow Americans for otherworldly profit, and with no restraint or the slightest concern for the harm and horror caused by their criminal activities and sociopathic behavior. If given a choice between saving the shatains, sociopaths, fiends, pathological liars, and den of vipers and thieves on wallstreet , and the USPS, – I would hazard that most Americans would support the latter and righteously condemn the former. You predatorclass monsters have exhausted any hope goodwill you can ever rely on from the people. Tamer elements want the ruleoflaw, justice, and prosecutions, – others – whose numbers are growing by the hour – want heads on spikes!!!! So before you nazi’s and predatorclass shatains think about dismantling or privatizing the USPS (ie criminalizing mail service for the wanton profits of the predatorclass) – know this bitches – your days of thieving and lying are numbered. There will be a reckoning and a balancing and there will be blood!!!

  36. It’s funny that after Tony gets to concluding, there always seems to be a mass shooting somewhere caused by one person a day or 2 after. And Annie’s suffering never ends.
    But Pats question of what we did before postal voting is simple. That’s why this country votes on a Tuesday, the citizens used to vote on Saturdays and found a large # of them would have to travel during the week and miss business hours at their home location. So the day was changed to Tuesday in order for the farmers to travel on the weekend, rest on Monday, vote and leave on Tuesday.
    By the time that postal voting occurred there was already so much fraud incorporated into voting, that the delegate system was created. It was designed to offset the double vote by having only a trusted # of individuals vote actually counted on the candidate for president, and the popular vote then circulated for debating or majority rules purposes.
    Unfortunately, today’s America is in dire need of being educated and disciplined. It’s so hard to be careful, so easy to be mislead, if you live by taste and feel, you surely will be dead.

  37. @filbt – “…By the time that postal voting occurred there was already so much fraud incorporated into voting, that the delegate system was created….”.

    A god-forsaken country, from the very beginning over-run by filth. No one GOOD ever came here “seeking a better life”. And the misery heaped on immigrants is sadistic. Greed is always accompanied by VIOLENCE, you stupid animal. What good is all the PSYCHObabble when it can’t correctly analyze NORMAL human reactions to the acts of the criminally insane spitting “laws” out their lying mouths claiming god’s work is skinning people alive and it is LEGAL?

    Mr. I’m-so-cowboy-wise – comment on the HISTORY in this documentary:

    And, yes, I am leaving the USA. Tax this, you vipers. No one here from my tribe (heck, not even my SPECIES) and seeing just a wee bit into the future, all you got is more face-eating on the horizon….what a bunch of stupid sh=ts to take “god’s country” and turn it into a HELL HOLE. Yeah, you all “deserve” to exist…

    cya, filth!

  38. @oregano – Guess no more beautiful stamps, and that whole line of a “welfare” small business that was a waste of money at the USPS…creative destruction marches on….

    But have no fear, once the Russian Mob in USA muscles in to “privatize” mail, here’s the digital art their kids will create and you all will feast on it to nurture your savage souls as “global leaders”:

    http://www.huffingtonpost.com/2012/08/10/pussy-riot-trial-putin-art_n_1762034.html?utm_hp_ref=world

  39. Remember that the Postal Service is already quasi-private…if we’re intent on privatization, its has to come with a Quid Pro Quo that it maintain or improve upon the service provided by the government, that it provide it at a reasonable, not extractive profit, and that funding be provided in the enabling legislation. Gee, that sounds like a public utility. There are many ways of establishing the commons functions of democratic government, but where we’ve failed in the past is in the funding and oversight of public-private ventures.

  40. @Oregano, “….There are many ways of establishing the commons functions of democratic government, but where we’ve failed in the past is in the funding and oversight of public-private ventures….”

    And no where was the fail more massive than in the conduct of the Iraq War, now continuing with the Homeland Insecurity apparatus and military “contractors” all across the board.

    Guess they’ll be shipping our mail around with the pallets of bullets and guns?

    Nice avoidance of what has been lost in these private-public ventures – culture. Beautiful stamps will be worth more eventually and the ones who destroyed the culture that produced the beauty will parade their craven avarice with pride as they “collect” them as “art”….

  41. Fractional reserve banking is the absolute root of all evil in our world.

    The documentary posted above is terrific, by the way.

  42. Bye Annie, cya, don’t want to be ya. It’s a small world yes, and perhaps you can fair better in a land with less educated people, fewer resources. Maybe no technology at all is a better place for you, walking and then learning new languages, seeing different plants and animals. Or maybe isolation is a fairer hand to be played right now, you have experience talking to yourself on line, that could go a long way to meeting the cave man of your dreams. The 2 of you can boast of peace and harmony among you and the animals you don’t have to hunt because your other half is so good at farming he can feed the both of you, cheap, for a whole year. No guns, drugs or violence to keep you awake at nite or busy running during the day. No need to argue over anything, cause we aint got nothin. No worry’s over health care, or insurance, or money. It’s all about you Annie, and your new raggedy Andy, No more misery for you from others , you can accomplish anything and everything away from here with your new inherent intelligence and talents in your new land of plenty. Yes Annie, you shall be a great success one day soon, and when you are, come back and have a drink with me the piper, he is asking you to join him, on his stairway to heaven.

  43. @filth – thanks for describing your cowboy world – a whole lotta nutin’….

    You’re the prime example of why everyone hates Americans. You, personally, had absolutely NOTHING to do with any human advancement ever made in the history of the world. You’re a liar, thief and probably a murderer since that always accompanies GREED.

  44. @Bond Man – share and re-share the documentary. It’s all about Western Civilization countries dismantling the system one by one – Iceland the world leader :-).

  45. Prove it! My world is free. Don’t be afraid of your free doom. ——

  46. Bruce E. Woych

    http://www.alternet.org/economy/theres-only-one-solution-might-fix-our-corrupt-financial-system?akid=9228.147584.LIxgY3&rd=1&src=newsletter694430&t=14&paging=off
    lterNet / By Les Leopold
    comments_image 68 COMMENTS
    There’s Only One Solution That Might Fix Our Corrupt Financial System
    The simple truth is our giant banking system is metastasizing throughout our economy. It’s sucking away our wealth. And it’s out of control.
    August 14, 2012
    sample quote:
    “Every time a bank is caught in one of these scandals (and every big bank has been caught), they point to their immaculate ethical policies that put the consumer first. They also brag about their sophisticated and rigorous risk management systems that are designed to prevent and contain the damage. Whatever happened, they claim, was a minor breach, an accident, a rogue trader, a bumbling manager or a misunderstanding. And those at the top are always insulated by plausible deniability.

    But all of this dissembling is a cover for the obvious: too-big-to-fail banks are the predators and we are the prey.

    And we’re talking about very big and powerful predators – predators who are so large that they can set prices at will.”

    READ ALL:
    http://www.alternet.org/economy/theres-only-one-solution-might-fix-our-corrupt-financial-system?akid=9228.147584.LIxgY3&rd=1&src=newsletter694430&t=14&paging=off
    lterNet / By Les Leopold
    comments_image 68 COMMENTS