Steagall, if you will just allow financial institutions, commercial banks, investor banks, insurance companies, if you allow them to merge, do away with these walls which Glass-Steagall, since the Great Depression, established, my God, it will be just terrific. It will be good for the economy, good for the American people, good for our international competitiveness.
I remember those debates because I was at that point in the House of Representatives. I was a member of the Financial Institutions Committee at that point. I was on the committee that dealt with that. I remember all the times Alan Greenspan came before the committee and Robert Rubin. We had Republicans, Democrats coming before the committee and saying: This is what you have to do. You have to deregulate. You have to let these guys merge. Bigger is better. Against my votes. Somewhere on the Internet there is a discussion I had with Alan Greenspan when he came before our committee. I made it very clear to the people of Vermont, to him and everybody else, that I did not think deregulation was a good idea, that I thought it would lead to disaster. Someplace in this world there is a quote of mine which pretty much predicts what was going to happen. But needless to say, I was one vote. The majority of the Members in the House and Senate voted to deregulate. The rest is, unfortunately, history.
What we saw is people on Wall Street operating from a business model based on fraud, based on dishonesty, understanding that the likelihood of them ever getting caught was small, that if things got very bad, they would be bailed out by the taxpayers, understanding that they are too powerful to ever be put in jail, to be indicted, understanding that in this country when you are a CEO on Wall Street, you have so much wealth and so much power and so many lawyers and so many friends in Congress, you could do pretty much anything you want and not much is going to happen to you—and they did it. Their greed and recklessness and their illegal behavior destroyed this economy.
What they did to the American people is so horrible. Here we had a middle class which was already being battered as a result of trade agreements, loss of manufacturing jobs, health care costs going up, couldn't afford to send their children to college—that had gone on for years—and then these guys started pushing worthless and complicated financial instruments and the whole thing explodes. And they come crying to the taxpayers of America to bail them out.
I will never forget—never forget— Hank Paulson coming before the Democratic caucus—I am an Independent and have long been serving as an Independent in Congress—saying that within a few days he needed $700 billion or the entire world's financial system would collapse. My suggestion to him at that meeting was: If you need the money, why don't you go to your friends and get the money? Why don't you go to all your banker friends and millionaire friends and billionaires friends and get some of that money, and don't go to the middle class of this country that has already been harmed.
In fact, we brought an amendment to the floor of the Senate, which was one of the first amendments I brought as a Senator, which said that the top 2 percent should pay for the bailout, not the American people. It got defeated on a voice vote.
So what happens on Wall Street is we have seen a tremendous concentration of ownership there, another issue we do not talk enough about. I know Senator Brown and Senator Kaufman and I worked on a proposal to try to break up these large financial institutions. I think we got 30-some-odd votes on that. We could not do it.
So what the American people should know now is, while we bailed out Wall Street, because they were too big to fail, three out of the four largest financial institutions—all of whom were bailed out very significantly—are now larger today than they were before the bailout.
Incredibly, since the start of the financial crisis, Wells Fargo has grown 43 percent bigger, JPMorgan Chase has grown 51 percent bigger, and Bank of America is now 138 percent larger than before the financial crisis began.
Can you imagine that? We bailed these guys out because they were too big to fail, and now three out of the four largest ones are much larger than they were. How did that happen? Well, in 2008, Bank of America—the largest commercial bank in this country— which received a $45 billion taxpayer bailout, purchased Countrywide, the largest mortgage lender in this country, and Merrill Lynch, the largest stock brokerage firm in the country. That is how Bank of America expanded. They were too big to fail. Today they are much bigger.
In 2008, JPMorgan Chase, which received a $25 billion bailout from the Bush Treasury Department and a $29 billion bridge loan from the Federal Reserve, acquired Bear Stearns and Washington Mutual, the largest savings and loan in the country. That is how JPMorgan Chase, a huge bank, became even bigger.
In 2008, the Treasury Department provided an $18 billion tax break to Wells Fargo to purchase Wachovia, allowing that bank to control 11 percent of all bank deposits in this country.
Hear this because this is quite unbelievable: When we try to understand what is going on in the economy today—the rich getting richer, the poor getting poorer, the middle class collapsing—today, after we bailed out all these large banks, three out of four of them are now much larger than they were before. Today, Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo—the four largest financial institutions in this country—hold about $7.4 trillion in assets, and that is equal to over half the Nation's estimated total output last year. Four financial institutions have assets worth more than 52 percent of our total output last year.
Instead of breaking up these folks, these large institutions, we let them get bigger. In fact, according to Simon Johnson, the former chief economist of the International Monetary Fund:
As a result of the crisis and various government rescue efforts, the largest 6 banks in our economy now have total assets in excess [he claims] of 63 percent of GDP. . . . This is a significant increase from even 2006, when the same banks' assets were around 55 percent of GDP. . . .
Do you understand what this is about? Four financial institutions owning over half the assets of America. You talk about economic power, you talk about political power, that is what we are talking about.
Simon Johnson continues: This is "a complete transformation compared with the situation in the U.S. just 15 years ago—when the 6 largest banks had combined assets of only around 17 percent of GDP."
So 15 years ago, 17 percent, six banks; today, four banks, and, he claims, 63 percent of GDP. In other words, over the last 15 years, the largest banks in this country have more than tripled in size.
Not only are too-big-to-fail financial institutions bad for taxpayers, the enormous concentration of ownership in the financial sector has led to higher bank fees, usurious interest rates on credit cards, and fewer choices for consumers. What do you think happens when you have a few institutions, a handful of institutions, controlling mortgage lending or where people get their credit cards?
Today, these huge financial institutions have become so big that according to the Washington Post: The four largest banks in America now issue one out of every two mortgages, two out of three credit cards, and hold $4 out of every $10 in bank deposits in the entire country.
If any of these financial institutions were to get into major trouble again, taxpayers would be on the hook for another substantial bailout. We cannot allow that to happen. So the whole reason for the bailout was that if any of these financial institutions collapsed, it would take down a significant part of the economy and millions of jobs. We had to prop them up. We had to bail them out. It turns out that since we bailed them out, these handful of financial institutions are now even larger than they were before and we now know they are enjoying very strong profits and they are paying their CEOs even more in compensation than they did before the breakdown.
In my view, if we are serious about understanding why the middle class is collapsing, if we are serious about getting this economy moving again long term, we have to have the courage to
