Last month, Senator Elizabeth Warren (D-MA) clashed with Fed chairman Ben Bernanke about “too big to fail” banks and the $83 billion subsidy the biggest banks receive because investors believe the government would bail out the largest financial institutions again if necessary. Bernanke argued that Dodd-Frank had given the government tools that could handle the failure of a megabank without taxpayer support — even though the legislation was seriously weakened by Senator Scott Brown on behalf of the Wall Street titans who now employ him.
Bernanke clarified his position on Wednesday and it seems he agrees with Warren that more needs to be done to fix the situation. “I agree with Elizabeth Warren 100 percent that it’s a real problem,” he said.
“Too big to fail was a major source of the crisis,” he added, “and we will not have successfully responded to the crisis if we do not address that successfully.”
The Fed chair’s admission follows Attorney General Eric Holder telling the Senate Banking Committee that the massive size of America’s largest financial institutions prevents the government from prosecuting financial crimes they may have committed.
There is definitely a conservative case against “too big to fail.” Bernanke was a registered Republican before he took over his nonpartisan position at the Fed. But there are definitely Republicans who believe something needs to be done to constrain the big banks that are bigger now than they were before the crisis.
Here are 5 other members of the Grand Old Party who want to break up the big banks.
Jon Hunstman
One of the most unconventional things about former Utah governor Jon Huntsman’s run for president was that he was the only candidate from either party talking about “right-sizing” the “too big to fail” banks.
David Vitter
The junior senator from Louisiana recently went to the Senate floor to support Sherrod Brown (D-OH) in the assertion that “‘too big to fail’ is alive and well.”
Sheila Bair
George W. Bush’s appointee to the FDIC, Bair has been an outspoken advocate for further financial reform. “We should not have banks that are ‘too big to fail,'” she said recently. “Any bank that’s ‘too big to fail’ is too big.”
James Pethokoukis
A columnist and blogger for the American Enterprise Institute, Pethokoukis was such an ardent Mitt Romney supporter that he had a hard time believing the positive jobs numbers that came out in October of 2012 — numbers that turned out to actually underestimate the strength of the economy. However, he has been a loud — if not the loudest — voice calling for Republicans to attack the “crony capitalism” that makes “too big to fail” possible.
“Capping bank size, limiting bank activities, higher equity capital requirements — all tools in the toolbox for eliminating the crony capitalist subsidy of the U.S. financial system by government,” he wrote recently.
George F. Will
When it comes to climate change, George F. Will doesn’t believe the settled science that says we’re headed to a climate catastrophe. But Will is a believer that too-big banks threaten our economy.
The 12 banks with $250 billion to $2.3 trillion in assets total 69 percent,” he wrote in his column “Time to break up the big banks.” “The 20 largest banks’ assets total 84.5 percent of the nation’s gross domestic product.”
He — as progressives often have — labeled the practice of bailing out giant institutions a means of “socializing losses while keeping profits private.”
