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Break Up The Big Banks
From the Panel
For: RICHARD FISHER
- Correcting ‘Dodd-Frank’ to Actually End ‘Too Big to Fail’
Richard Fisher, Statement before the Committee on Financial Services, U.S. House of Representatives, June 26, 2013We advocate using as little government intervention and statutory modification as possible to restructure the largest institutions to a size that is effectively disciplined by both market and regulatory forces.
- Ending 'Too Big to Fail': A Proposal for Reform Before It's Too Late
Richard Fisher, Remarks before the Committee for the Republic, January 16, 2013'I wish to speak to a different kind of repression—the injustice of being held hostage to large financial institutions considered “too big to fail,” or TBTF for short.'
- Two Areas of Present Concern: The Economic Outlook and the Pathology of Too-Big-to-Fail
Richard Fisher, Remarks before the Senior Delegates’ Roundtable of the Fixed Income Forum, July 23, 2009Fisher discusses concerns for the longer-term outlook for the economy and the separate but related problem of the concentration of financial power in the hands of too few institutions.
- Vanquishing Too Big to Fail
Richard Fisher and Harvey Rosenblum, Dallas Fed, 2012 Annual ReportThe solution for ending ‘too big to fail’ is not bigger government but smaller, unsubsidized banking institutions governed by the market discipline of creditors at risk of loss.
- Q&A with Richard Fisher on TBTF
Richard Fisher, Dallas Fed, 2012 Annual ReportFederal Reserve Bank of Dallas President Richard Fisher answers questions that have arisen about the Dallas Fed’s proposal on ending “too big to fail.”
For: SIMON JOHNSON
- Big Banks: Should Big Banks Be Broken Up?
Simon Johnson and Charles Calomiris, The Economist, May 2013Johnson and Calomiris debate whether to break up big banks—probably the biggest open question remaining since the financial crisis.
- Five Facts About the New Glass-Steagall
Simon Johnson, Bloomberg View, July 11, 2013At a stroke, the proposed law would force global megabanks such as JPMorgan Chase and Bank of America to become smaller and much simpler -- divorcing high risk activities from plain-vanilla traditional banking.
- Brown-Vitter Rearranges Financial-Reform Battlefield
Simon Johnson, Bloomberg View, April 28, 2013The dangers of reckless behavior by global megabanks are now understood much more broadly. And Brown-Vitter provides an appropriate road map for addressing some of the core problems and making the financial system significantly safer.
- My Podcast Chat with Economist Simon Johnson on Breaking Up the Big Banks
James Pethokoukis, American Enterprise Institute, January 23, 2013Johnson discusses financial reform, Too Big to Fail, and America’s huge national debt.
- Breaking Up Big Banks Is a Severely Conservative Project
Simon Johnson, Bloomberg View, October 28, 2012The true conservative agenda should be to take government out of banking by making all financial institutions small enough and simple enough to fail.
- Breaking Up Four Big Banks
Simon Johnson, Economix, New York Times, May 10, 2010Too-big-to-fail banks should be made smaller, and preferably small enough to fail without causing global panic.
- The Quiet Coup
Simon Johnson, The Atlantic, May 2009Recovery will fail unless we break the financial oligarchy that is blocking essential reform.
Against: DOUGLAS ELLIOTT
- Five Years After Lehman, We’re Much Safer
Martin Neil Baily and Douglas Elliott, Real Clear Markets, September 9, 2013It is almost five years since the worst phase of the financial crisis began with the collapse of Lehman Brothers, and the ensuing market panic. We are much safer now, and will be safer still going forward, but this is not the message that the public hears.
- Higher Bank Capital Requirements Would Come at a Price
Douglas Elliott, Brookings, February 20, 2013There are trade-offs between higher capital and goals such as economic growth.
- Let’s Relax, and Not Break Up the Big Banks
Douglas Elliott, Real Clear Markets, August 21, 2012We should not lose sight of the real economic advantages to having at least a few large U.S. banks that can efficiently provide a full range of services and products globally.
- Dealing with ‘Too Important to Fail’ Banks
Panel Discussion, Brookings, June 14, 2013The Economic Studies program at Brookings reviewed and debated the issue of bank size and bank funding. Panelists included FDIC Vice Chairman Thomas Hoenig, banking expert Rodgin Cohen, and Senior Fellow and Director of the Initiative on Business and Public Policy Martin Baily. Douglas Elliott, fellow in Economic Studies, served as moderator.
For: PAUL SALTZMAN
- Vanquishing TBTF: Rhetoric Versus Reality and the Value of Systemically Important Banks in the Global Financial System
Paul Saltzman, Bob Chakravorti and John Court, The Clearing House Association, March 26, 2013Actual and prospective reforms are addressing the Too Big to Fail problem. Additional proposed reforms may harm growth and stability rather than enhance it, so costs/benefits should be carefully analyzed.
- Ending ‘Too Big to Fail’: Title II of the Dodd-Frank Act and the Approach of ‘Single Point of Entry’ Private Sector Recapitalization of a Failed Financial Company
Banking Brief White Paper Series, The Clearing House, January 2013This white paper concludes that a Title II ‘single point of entry’ private sector recapitalization provides a viable process for handling the failure of a large, complex financial institution without significant systemic consequences and without cost to taxpayers.
- The Inside Story of How the Clearing House Proved Dodd-Frank Works
Barbara Rehm, American Banker, December 19, 2012The Clearing House Association, a trade group made up of the 18 largest banks, spent 10 months and $2 million to plan a simulation of a large bank failure.
- The Big Bank’s View of Proposed New Rules
Paul Saltzman, Letter to the Editor, New York Times, August 1, 2013In response to a Times editorial, Saltzman gives reasons why the large banks do not enjoy a so-called government subsidy.
- A Spirited Conversation Assessing the Risks and Benefits of Big Banks
Paul Saltzman, John Dugan, Phillip Swagel, Ingo Walter and Arthur Wilmarth, Center for Banking and Finance, University of North Carolina School of Law, November 8, 2011The transcript of a panel discussion, moderated by Saltzman, on the risks and benefits of big banks.
ARTICLES FOR & AGAINST
- The Case for Breaking Up the Big Banks
Mark Thoma, The Fiscal Times, November 20, 2012We have paid too little attention to the growing economic and political power of our largest firms, and this concern is not limited to the financial sector.
- Bigger Banks, Riskier Banks: The Post-Bailout Continuation of a Pre-Bailout Trend
Nomi Prins and James Lardner, Demos, 2010It is time for Congress to create a framework for banks to transform themselves into leaner, more accountable, and sustainable financial institutions.
- Break Up the Banks
Arnold Kling, National Review, April 5, 2010It’s politics, not economics, that made them behemoths.
- Too Big to Live
Joseph Stiglitz, Project Syndicate, December 7, 2009Banks that are too big to fail are too big to exist. If they continue to exist, they must exist in what is sometimes called a “utility” model, meaning that they are heavily regulated.
- Too Big for Comfort
James Pethokoukis, The Weekly Standard, June 1, 2012The evidence shows that the supposed benefits from supersized banks' scale are outweighed by the risks of disaster they generate.
- Big-Bank Pioneer Now Seeks Breakup
E.S. Browning and David Benoit, Wall Street Journal, July 26, 2012Weill, who built Citigroup Inc. through repeated acquisitions—including the 1998 megadeal that prompted Congress to strike down a six-decade-old ban on commercial banks doing investment banking, and vice versa—called for the breakup of huge U.S. financial conglomerates.
- In Defense of Big Banks
William Harrison, Jr, New York Times, August 22, 2012Breaking up some big banks would hurt their customers, clients and the broader economy. It would actually inject new risks into the financial system.
- The Big Banks: Too Complex to Manage?
Central Banker, Winter 2012Radical approaches to ending ‘too big to fail’ like reducing bank complexity and size, or creating ‘narrow banks’, are unlikely to succeed.
- Scale Economies in Banking and Financial Regulatory Reform
Loretta Mester, The Region, September 2010The literature on scale economies in banking suggests that imposing a strict size limit would have unintended consequences and work against market forces.
- Banking on Our Future: The Value of Big Banks in a Global Economy
Hamilton Place Strategies, February 2013Ultimately, breaking up U.S. banks will not improve the safety of the global financial sector and would reduce U.S. influence over the financial sector globally.
- Breaking Up the Big Banks: Is Anybody Thinking?
Peter Wallison, American Enterprise Institute, September 18, 2012Although breaking up the largest US banks has attracted significant support from some politicians and commentators, these and other supporters seem to have ignored basic questions that must be answered before a breakup would make sense.
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