A year ago the whole banking system in the United States and other countries came close to melting down. When Lehman Brothers failed and it looked like other giant investment banks might follow the government went into panic pass mode and the Congress authorized a $1 Trillion bailout that enraged just about about everybody on both the left and right. We were told that the big Wall Street firms were 'too big to fail' and had to be saved or we would revert to a barter system. A few weeks ago I asked for an interview with Congressman Paul Kanjorski and one of the questions I want to ask is Some companies are described as to big to fail, how about breaking them up? The interview is not scheduled yet (C'mon Abbie and Ed) but Kanjo has proposed a mechanism to avoid that trap in the future. President Teddy Roosevelt broke up Standard Oil in the last century and that helped the economy in the long run and the big banks are very much like the Standard Oil of today. The repeal of parts the Glass-Steagal Act also had a lot to do with creating this mess.
Politico: Rep. Paul Kanjorski (D-Penn.), a senior member of the Financial Services Committee, has proposed the most explosive provision so far in the debate over financial reform, seeking to empower federal regulators to preemptively break up financial firms deemed "too big to fail."
The powers Kanjorski is proposing are sweeping – he wants to hand the federal government a measuring stick to figure out which companies are a threat to the larger financial system, then give the feds the authority to break them up regardless of their financial health.
Kanjorski said during Tuesday’s House Financial Services Committee hearing that his provision would make it “so that nowhere in the world in the future will there be gigantic tsunamis coming out of nowhere and striking the entire world economy.”
There are 15 or 20 firms, Kanjorski said, particularly in the financial industry, that are “so large that every body knows that we can’t allow them to fail.”
Senator Bernie Sanders (VT-I) has introduced similar legislation in the Senate.
Bloomberg-U.S. Senator Bernie Sanders unveiled legislation requiring Treasury Secretary Timothy Geithner to name banks whose collapse may shake the economy and break up the firms in a year, fueling efforts to end taxpayers bailouts. “If an institution is too big to fail, it is too big to exist,” said Sanders, a Vermont independent. “We should break them up so they are no longer in a position to bring down the entire economy .” The legislation would give Geithner 90 days to list the commercial and investment banks, hedge funds and insurance companies deemed “too big to fail.” Those firms would be broken up within a year, he said.
Kanjo was on CNBC explaining is proposal. He is on CNBC so much lately I think that they should give him his own show.
2 hours ago