Bernie Sanders' "Too Big to Fail" bill is short, sweet and has no chance of passing
Sen. Bernie Sanders’ proposed bill ordering the secretary of the Treasury to submit to Congress a list of “Too Big to Fail” financial institutions and then to break up those institutions in short order is garnering a surprising amount of attention. Surprising, because first, sad to say, Sanders does not have the best track record in getting bills he has sponsored out of committee, much less signed into law, and second, the slender, two-page piece of legislation is remarkably slight on the details as to how the secretary would go about accomplishing this critical task.
At the Baseline Scenario, James Kwak is ebullient:
The bill says that Treasury can break up the institutions any way they want to, so long as the resulting entities do not individually threaten the financial system (and thereby our economic well-being). So opponents can throw out all those arguments about why separating commercial and investment banking is bad, or why banks have to be global (a bit of an embarrassment to Wells Fargo) — now they need to argue that a well-functioning financial system must include institutions that could take down the financial system.
I don’t think this is true. I don’t think “opponents” are going to bother at all with a bill proposed by one of the Senate’s most left-wing members. They’re saving their fire for considerably more conservative proposals that are backed by the White House and might have an actual chance of passing. Sanders’ bill works nicely as a populist thermometer for measuring rage against the Wall Street machine, but it is more an act of political theater than a step toward realizable policy.
But for what it’s worth, here’s where to go to sign Bernie Sanders’ “Too big to fail is to big to exist” petition:
And here’s the bill, in its entirety:
To address the concept of “Too Big To Fail” with respect
to certain financial entities.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the “Too Big to Fail, Too
5 Big to Exist Act”.
6 SEC. 2. REPORT TO CONGRESS ON INSTITUTIONS THAT
7 ARE TOO BIG TO FAIL.
8 Notwithstanding any other provision of law, not later
9 than 90 days after the date of enactment of this Act, the
10 Secretary of the Treasury shall submit to Congress a list
1 of all commercial banks, investment banks, hedge funds,
2 and insurance companies that the Secretary believes are
3 too big to fail (in this Act referred to as the “Too Big
4 to Fail List”).
5 SEC. 3. BREAKING-UP TOO BIG TO FAIL INSTITUTIONS.
6 Notwithstanding any other provision of law, begin-
7 ning 1 year after the date of enactment of this Act, the
8 Secretary of the Treasury shall break up entities included
9 on the Too Big To Fail List, so that their failure would
10 no longer cause a catastrophic effect on the United States
11 or global economy without a taxpayer bailout.
12 SEC. 4. DEFINITION.
13 For purposes of this Act, the term “Too Big to Fail”
14 means any entity that has grown so large that its failure
15 would have a catastrophic effect on the stability of either
16 the financial system or the United States economy without
17 substantial Government assistance.
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