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- iHaveNet.com: Economy
by Jesse Jackson
Amid a flood of revelations about Wall Street fraud and corruption -- from mortgage brokers
peddling loans they knew couldn't be paid back, to rating agencies dressing up junk with AAA ratings, to
Goldman Sachs creating and selling a security designed to fail
-- the
Senate Democrats will seek to act. The House has already passed a comprehensive bill. Not one Republican in the House
voted to support reform. Senate Republicans are vowing to block consideration, but most observers think they won't dare
stand in the way of basic reform. The big question, however, is whether the current
Here the key issue is whether the
The big banks were rescued without being reformed. They have emerged from the crisis bigger and more concentrated than ever. They've already reopened the casino and started to hand out million-dollar bonuses. If nothing is done, they will go back to the same practices that led us off the cliff.
But the situation is even worse than before. The big banks are bigger. The top six --
JPMorgan Chase,
Citigroup,
Now they are officially deemed too big to fail. That means that they are too big for the market to discipline. They have an explicit promise that if they get in trouble once more, the government will step in to keep them from blowing up the financial system.
The effect of this is utterly corrupting. They can borrow at a lower rate than smaller banks, since creditors know that no matter how risky their activities, they won't be allowed to fail. And they are free to take the wildest bets, confident that while they pocket the winnings while taxpayers will cover their losses.
More important than that, banks this big wield enormous political power. They finance elections. They are spending $1 million a day to lobby against financial reform. Their wealth makes them powerful advisors whether in office or out. Their power allows them to create the rules that reinforce their power.
Only their excesses contributed directly to blowing up the economy, doubling our national debt, causing millions to lose their homes and jobs, and costing citizens literally trillions in retirement savings and home values. If they are to be brought under control, now is the time.
Neither the
This week will feature a fight to amend the
Mark Zandi, Sen. John McCain's economic advisor, calls the big banks an "oligopoly." The question now is whether they are more powerful than the democracy. Can citizen power overcome the banks' money power? Will your senators stand with the big banks or with citizens? The stakes are high. Breaking up the big banks is the only reform needed -- but it is a necessary reform. Now is the time to make your voice heard. Every senator should be put on notice. This is no time for politics as usual. Hold them accountable for the choice they make.
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Time to Break up the Big Banks