“Too big to fail.”
This phrase will always be associated with the 2008 economic collapse that sent America into the deepest recession since 1929. In order to stop the financial bleeding, the U.S. government voted to rescue the big banks rather than allow them to fail and take our economy with them. Ever since, big banks have only gotten bigger on the premise that if they fail again, the government will bail them out. Billions of dollars in taxpayer subsidies have been dealt to those very banks in the years since.
But on Friday, the U.S. Senate did something that it rarely does these days. An amendment was offered as an attachment to the Senate budget bill and it not only gained the support of both Republicans and Democrats, it received unanimous support. By a vote of 99-0, the U.S. Senate voted to strip “too big to fail” banks of the taxpayer subsidies they’ve been getting for far too long.
According to The Hill, the amendment was introduced by Louisiana Republican David Vitter and Ohio Democrat Sherrod Brown. The bipartisan proposal “ends Too Big To Fail subsidies or funding advantages for Wall Street mega-banks with more than $500 billion in assets.”
Senator Vitter said:
“There are at least three independent studies recently that underscore that ‘Too Big To Fail’ is still alive and well,” and that, “’Too Big To Fail’ policies are creating an unfair playing field for smaller banks.”
Additionally, The Hill reported:
“Brown and Vitter argue that the Dodd-Frank financial reform law didn’t do enough to keep large banks in check. They say that if banks are still ‘Too Big To Fail,’ they have an unfair advantage and are able to borrow more money since lenders believe they would be bailed out if a risky investment fails.”
The unanimous vote marks the first time the U.S. Senate has made a move against “too big to fail” since passage of the Dodd-Frank law. The amendment should be seen as a victory for Occupy Wall Street, which protested the big banks and “too big to fail” for over a year. It’s also a win for Democratic Senator Elizabeth Warren, who has been crusading against the big banks on behalf of taxpayers since long before being elected to office last year.
The amendment to end big bank subsidies is certainly justified. Two reports indicate that the banks were rolling in taxpayer dollars that they didn’t need. In February, Bloomberg News reported that the big banks made an estimated $83 billion a year. But that number could be even higher, according to top banking analyst, Chris Whalen. In March, Whalen estimated that big banks rake in more than $780 billion of government subsidies every year. That means banks have been making trillions of dollars over the last few years even though they didn’t need the money.
After hearing those numbers, it’s clear the U.S. Senate made a wise decision to eliminate subsidies for big banks. This will undoubtedly save hundreds of billions of taxpayer dollars to be used for different causes like infrastructure and jobs.
The only problem, of course, is now that the Senate has passed their version of the budget, complete with an end to government handouts to Wall Street banks, it falls to the House to approve the bill and send it to the President. In short, we have to depend on House Republicans to get the job done and, considering the conservative obsession with forcing the Ryan Budget upon America, passage of the Senate bill looks grim. The Senate finally gets their act together and unites to do something right for a change, and now conservative extremists in the House could ruin it for everyone. Now would the time for everyone to get on the phone with their representative in Congress to demand passage of the Senate budget.
The Senate deserves credit and huge cheers for uniting against the big banks that have been trying to take American taxpayers for every penny they’ve made over many years. Now if the Senate could just strip defense contractors and Big Oil of their taxpayer subsidies as well, we can pay off our debt, stop targeting programs that help Americans, and get back to the surplus days of the Clinton Administration.