Hmmm....will the new administration break up the big banks?

[Dover]

I've being stomping my feet about the consolidation and the bailouts, etc. But could there be
a method to the madness?...Perhaps a plan to bring the big banks down to size? The Finance Industry (and megabanks) have gotten so big and are so opague that it's getting to the point that they are unregulatable and are perceived to transcend and threaten government control entirely. One would have to have some big cojones to take them on (and hopefully excellent protection), but SOMEONE has to do it...and soon! So much needs to change in that area, it's hard to imagine where to begin. But if there is to be meaningful change these reins must be seized to change our trajectory.
What is the alternative?

Perhaps I should just pull up a chair, watch and wait for the real action to begin next year.
And in the meantime, do my part by endorsing my local community bank.

I predict big lobby money infesting and flooding the halls of Congress and many a Brutus(e'tu?)
in the pack if this is the plan. At the very least, one can deduce from the 'noise' beginning to filter through the chaos that the Big Banks may indeed feel a serious backlash next year.

First there is this statement from an article I've already posted in this forum:


But some analysts are arguing that the current wave of consolidation could be followed by a move to break up the biggest banks.

In a recent congressional hearing, Nobel Prize-winning economist Joseph Stiglitz said the consolidation of the banking industry is "a very serious problem."

I think it’s part of a general failure to enforce antitrust laws in the last few years. So one of the things I think is part of your exit strategy is that we have to think about breaking up some of the big banks.”

Even American Banker, which covers the industry, predicts in a story titled “Pressure Builds to Corral the Giant Firms” that “the financial services companies considered ‘too big to fail’ may face a political backlash next year.”

..snip..


Until a new administration takes action, consumers and small businesses can always vote with their feet and use a smaller, community bank.

“Many consumers (are) turning to local banks, saying, 'I’m much more comfortable having my money with you,’” says Nancy Atkinson, senior analyst with Aite Group, a research firm that covers the financial services industry. “And small businesses say, 'I know my local banker, and I trust that person.’”


http://www.msnbc.msn.com/id/27441147/page/2/

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Pressure Builds to Corral the Giant Firms
American Banker
Wednesday, October 29, 2008

By Emily Flitter

WASHINGTON — Right now it pays to be big, but observers say the financial services companies considered "too big to fail" may face a political backlash next year.

Lawmakers are already talking about requiring bankers accepting government money to make loans or give borrowers breaks. Others, including academics and small-bank executives, have gone much further, recommending that the government break apart the largest banking companies, cut the 10% deposit cap in half, or amp up their taxes.

The issue is likely to be a hot topic next year when lawmakers try to revamp the financial regulatory system.

Though observers disagree on the specifics, they agree the government now has more leverage — as a shareholder, among other things — over the largest institutions.

"Government intervention, through representing the taxpayer in saving the banking system, has given them a seat at the table — a large seat at the table," said Manuel Johnson, a former Federal Reserve Board vice chairman, who is now the co-chairman and senior partner of Johnson Smick International Inc., a financial policy consulting firm. "That means … are potentially subject to all kinds of political input. … I could see a situation where politicians were arguing for a breakup of large institutions or taxation to redistribute profits. It wouldn't shock me."

Debate over which institutions are "too big to fail" has raged for years. The government came close to officially unveiling such a list Oct. 14, when it decided to divvy up $125 billion among nine institutions. The top four — Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo & Co. — each received $25 billion.

So far the government has demanded little in return for the investment. Among other things, it has limited bonus pay and required a 5% return. But observers said a new administration could push the Treasury Department to require much more....cont'd

(free registration required)
http://www.americanbanker.com/search.html?search-select=American+Banker&query=Pressure+Builds+to+Corral+the+Giant+Firms&search-submit=Go

or try this:
http://www.americanbanker.com/printthis.html?id=2008102846J2F9FG