We Don’t Need To Break Up the Big Banks. We Need To Put Them Under Democratic Control.

[Judi Lynn]

February 2, 2016

We Don’t Need To Break Up the Big Banks. We Need To Put Them Under Democratic Control.

The problem isn’t that banks are “too big to fail”—it’s that they’re too important not to be under democratic control.

BY Jamie Merchant

Public interest in progressive financial reform is growing. After the epic crash of 2008 and the “Great Recession,” and with a boost from a sharply populist campaign season, a number of left-of-center proposals have circulated around the question of what to do about the banking system, which has molded contemporary society in its image and defines the horizon of what is politically possible.

The international banks, whose outstanding derivative contracts are estimated to have a value of over $500 trillion, are the massive and powerful conduits of world capital, with financial assets that dwarf the annual GDP of the richest countries. A new antitrust movement aims at breaking the power of the largest banks by dismantling them. But while the intentions behind “breaking up the banks” are good, such a program is deeply flawed, doubling down on market competition and nationalism when we should be thinking about new forms of public control and transnational coordination.

We need a politics that can empower progressive political forces by shifting the economic center of gravity decisively to the left. Instead of “too big to fail, too big to exist,” the new watchword for the politics of finance should become “financial power for the public good.”

The liberal thrust of the new antitrust movement

Bernie Sanders has come out most forcefully in favor of “too big to fail, too big to exist,” but he is far from the only one. Elizabeth Warren advocates similar measures, and even Hillary Clinton, a staunch advocate for Wall Street, has paid lip service to popular hatred of the banks. Some academic economists also now endorse some version of the proposal to break them up.

More:
http://inthesetimes.com/article/18816/big-banks-too-big-to-fail-nationalize-democratize-finance

[Peace Patriot]

1. In These Times is a great publication.

Saved my sanity during the Bush junta. (In These Times and John Stewart.) Thanks for this post. Great food for thought! I'm reading it and thinking! There are some fascinating and creative ideas contained therein, just with a glance through. Got to go to sleep now. What a couple of days on the political front, eh? I'm exhausted.

[Erich Bloodaxe BSN]

2. I disagree.

Even if they are put under 'Democratic control', some sort of mistake could be made that causes a massive collapse of the economy again. The only real way to ensure that can't happen is to simply make it so NO corporation (or tiny number of corporations) can take down the economy if they destroy themselves. That we aren't FORCED to bail them out if they do something so stupid they go out of business.

ETA - Actually that' not the only real way, and maybe I'm misreading - the other way would be to completely nationalize the financial industry and get rid of all the for-profit gambling entirely.