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U.S.
Senator Sherrod Brown
Ensuring
Ohio Taxpayers Don’t Pay
for Wall Street’s Failures
Most
Ohioans would be surprised to
know that the same Wall Street megabanks which received bailouts from
taxpayers
in 2009 also receive taxpayer-funded advantages today simply because of
their
“too big to fail” status. This taxpayer-supplied subsidy is wrong, and
it puts
community banks in Ohio at a competitive disadvantage.
This
gives them access to cheaper
funding and more favorable borrowing terms than dependable Main Street
institutions – like Huntington Bank or The Peoples Bank in Coldwater,
Ohio –
simply because the market knows that the government would choose to
bailout the
Wall Street megabanks if they again reach the point of collapse.
A
few Wall Street megabanks have
become so large and so complex that no one—not their executives, nor
their
shareholders, nor their regulators—truly understand their financial
health.
Should these institutions fail, they would take the rest of the economy
with
them. But instead of failure, these megabanks would ask taxpayers to
cover
their losses, to bail them out as we did five years ago. When even the
architect of the “too big to fail” banking model, former Citigroup CEO
Sandy
Weill, agrees that the biggest banks should be broken up, we should all
realize
it’s time to act.
Although
the biggest megabanks were
too big to fail before the crisis, they have only gotten bigger. The
four
largest behemoths, now ranging from $1.4 trillion to $2.3 trillion in
assets,
are the result of 37 banks merging 33 times. In 1995, the six biggest
U.S.
banks had assets equal to 18 percent of GDP. Today, they are about 63
percent
of GDP. They now have twice the combined assets of the rest of the top
50 U.S.
banks.
I’ve
visited several community
banks throughout Ohio recently and have talked to community bank
executives
about the disadvantage they face competing against Wall Street
megabanks.
Millions of families and small businesses depend on their community
banks for their
savings accounts, home mortgages, and business loans. Community banks
help
create countless jobs and provide safe and reliable financing options
to Ohio’s
families.
Taking
the appropriate steps will
lead to more mid-sized banks – not a few megabanks – creating
competition,
increasing lending, and providing incentives for banks to lend the
right way.
Just about the only people who will not benefit from my plan are a few
Wall
Street executives.
That’s
why my Republican colleague,
Senator David Vitter from Louisiana, and I are working on bipartisan
legislation to address this “Too Big to Fail” problem. We have pressed
regulators to require the biggest banks to have more of their own
capital on
hand to cover their losses, so taxpayers won’t be asked to do so again.
We have
asked the government watchdog group GAO to quantify the annual subsidy
that
megabanks receive from the U.S. government. And now we are taking
action to
prevent economic collapse and taxpayer-funded bailouts in the future.
American
taxpayers don’t want us to
wait until another crisis develops. They want us to ensure that Wall
Street
megabanks will never again monopolize our nation’s wealth or gamble
away the
American Dream. We cannot restore Americans’ faith in the financial
markets and
in representative government until we ensure that taxpayers are not
paying for
Wall Street’s failures.
Sincerely,
Sherrod
Brown
U.S.
Senator
See
the video here
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