Laughing All The Way To…Well, You Know

Yggy asks “cui bono?” on the sudden Republitarian urge to break up Too Big To Fail banks, and comes up with five possibilities:

— 1. Breaking up banks will reduce the political clout of major financial institutions.

— 2. Breaking up banks will end “too big to fail” as a phenomenon.

— 3. Breaking up banks will serve the interests of mid-major banks.

— 4. Breaking up banks gives Republicans something to talk about while in practice they work to subvert the regulatory framework.

— 5. Breaking up banks is a slogan people understand that can be used as a focal point for a broader regulatory agenda.

He basically responds that One and Two are basically baloney.  Three is definitely true, Four is where the alarm bells should be going off, and Five is gravy.

I think he’s on to something, and I’ll add that right now, Wall Street’s power benefits a number of mostly blue states:  New York, New Jersey, Connecticut, and the New England states (and on the periphery, blue states like incorporation-friendly Delaware.)  Coming from the Cincy area, where mid-major banks like hometown heavyweight Fifth Third Bank and other regional biggies like US Bank, Key Bank and PNC Bank are always fighting each other for turf, I can tell you number Three on that list is definitely a big deal.

Combined with the above, I’m thinking Midwestern Republicans with the aim of Reason Four there (and those from Southern regional banking capitals like Atlanta, Miami and Charlotte) would love to blow a hole through the Big Apple’s power and redistribute the hell out of some wealth.  It’s a compelling argument.

Question is, is this new “bipartisan” effort worth it, when all the GOP is trying to do is rearrange who ends up in TBTF status while simultaneously making sure there’s nothing truly bad that would happen to any of the banks?

I trust these suddenly concerned Republicans about as far as one of them could throw me.

45 replies
  1. 1
    Ben Franklin says:

    Isn’t it a tragedy? The only politicos doing something about the Bankers, is their former incorrigible paramours.

    Then there’s Issa, Cornyn and Paul, those stalwart, yet lone defenders of civil rights looking into Aaron Schwarz.

    You get the politicos you deserve.

  2. 2
    The Dangerman says:

    Mr.’s Too Big To Fail should be introduced to Mr. Antitrust; treble damages should get their attention.

    Speaking of TBTF, is Gonzaga the weakest 1 seed ever? Very unimpressive so far.

  3. 3
    MattF says:

    First, there’s traditional hostility between Red state businesses and New York (and worldwide) financial institutions. Second, the Washington/New York financial and regulatory nexus is the enemy, and weakening the enemy is the main thing, never mind ideology. Finally, it would be a populist issue that could appeal to people who have been unmoved by Tea Party issues to this point.

    Blaming politicians and the big banks could be effective.

  4. 4
    scav says:

    Well, there is that internal fighting going on over control of the R. party, with the corporate end squaring off withwhatever the hell that other end is. If major Financial players are threatening to pick up their ball and play more on both sides of the street, some R’s might find it adventageous to throw a little red meat to that fraction of the base howling for it (or at least threaten to do so). I just wouldn’t rule anything out. It’s all probably theatrics and posturing, usually is.

  5. 5
    jl says:

    ” I trust these suddenly concerned Republicans about as far as one of them could throw me. ”

    I did not know that Zandar has the dimensions, temperature, and other general characteristics of a very large house on fire.

  6. 6
    The Moar You Know says:

    While I don’t think the Republicans will break up TBTF banks, merely because they can’t seem to do anything these days, if they did I would cheer and then pull the lever for the most acceptable Democrat, as always.

    This is one of those issues where I really don’t give a shit what their motivations are; these institutions present too much of a danger to the world economy to be allowed to continue as they are. Anyone who wants to break them up has my permission.

  7. 7
    NotMax says:

    I trust these suddenly concerned Republicans about as far as one of them could throw me.

    6. Breaking up banks means the creation of more banks, each one of which individually can then dole out campaign cash.

  8. 8
    Bubblegum Tate says:

    One wingnut I know really is serious about breaking up banks–indeed, any overly large corporation. He links it to his wingnutty Catholicism vis a vis the principle of subsidiarity (the concept that control should be as localized as possible). From there, he tries to tie it to the teabagger screams of TYRANNY!, but every time he pitches it to his fellow wingnuts, they all call him a commie and tell him to go pound sand. It’s both peculiar and amusing.

  9. 9
    Ben Franklin says:

    It would be interesting if they came up with a Bull Moose type Party, which was started by Teddy who wanted to compete with the progressive WW.

    He was a naturalist, after all. He created our National Parks.

    It could be something akin to Billy stealing the conservative ideas of his rivals in the 90’s

  10. 10
    smintheus says:

    Actually, Yglesias is saying “I often detect a kind of underlying confusion as to what it is proposals to cap bank size are supposed to accomplish.” The title is “What Problem Does Breaking Up The Banks Fix?” It’s not just about why Republicans are now considering the matter.

    In those terms, Yglesias’ comments are nonsensical. It seems obvious that too big to fail is a major problem for a range of reasons.

  11. 11
    Ted & Hellen says:

    Why did we have to wait for my senator Elizabeth Warren to make it to D.C. before hearing anything of substance from a prominent Dem regarding breaking up the banks?

    Especially Obama, who has been there four years.

    Oh, that’s right he was too busy stuffing his admin with Wall Street and bank types.

  12. 12
    Maude says:

    The Repubs in the House have a bill to get rid of those regulations they don’t like.

  13. 13
    Higgs Boson's Mate says:

    — 5. Breaking up banks is a slogan people understand that can be used as a focal point for a broader regulatory agenda.

    Going by the rule of thumb that Republicans will back whatever will do the greatest amount of harm to the greatest number of people I’m going with this answer. Breaking up the TBTF banks is the part that Republicans will trumpet. Dismantling regulation to the point where any bank could be a time bomb won’t get mentioned.

  14. 14
    Baud says:

    Sherrod Brown’s no fool. And this won’t go anywhere.

  15. 15
    jl says:

    BTW, in the link MY discusses, this ‘break up the banks’ is all slogan. Exactly what does that mean? With the GOP love of corporate shell games, this may be one of those ideas where the devil is so far down in the details, and ever burrowing deeper, you may never get him out.

    Also, from some of the conservative eggheads, springs the odd notion of a magic ‘simple’ government intervention or rule that will somehow, paradoxically, restore some ethereal pristine natural competitive equilibrium solution, that does not have to be repeatedly, forever more, jiggled and joggled and revised.

    So, my money is on the idea that this is a good slogan to get something going. What that something might be, and whether any real consensus can occur when actual plans are formulated, remains to be seen.

  16. 16
    Zifnab says:

    Who are these “Republicans” we are hearing about in broad brush strokes? I see Vitter making a proposal. I don’t see Boehner walking to the floor of the House with a bill that’s cleared the House banking committee.

    You think Congressman Peter King (R-NY) is going to green light this legislation? You think Senator Pat Toomey (R-PA) is going to wave this through? Ha!

    I know a trial balloon when I see one. If Democrats are smart, they’ll sit back and wave this one through. Call the GOP’s bluff and see if they’re willing to put any actual legislation on the table. Or slide a financial transactions tax into the bill, and watch Republicans start filibustering their own legislation again.

    I think there’s a reason we’re seeing this proposal in the Senate – where Dems like Schumer are going to want to squash it flat out of reflex – and not in the House – where its Republicans who would have to take the heat for letting it through. Republicans are running game. They have absolutely no desire to see a bank breakup pass. This is all for the cameras and nothing will come of it.

  17. 17
    Suffern ACE says:

    I think Breaking up the Banks is a way to offer an alternative to Dodd-Frank. That will be be repealed and the breaking up part will somehow disappear. Like the promise of vocational training for people displaced by NAFTA. Or that affordable housing for teachers and nurses that’s supposed to be built in New York whenever they gut a neighborhood to build a new stadium.

  18. 18
    aimai says:

    @Ted & Hellen:
    Wow! you seem to have missed the fact that “your Senator” (and mine, btw) Elizabeth Warren wouldn’t have been the founder of the CPB or a Senator if i weren’t for being advanced and supported by Obama. Also, perhaps you might dimly remember her being given a plum position at the DNC?

  19. 19
    schrodinger's cat says:

    Its not the size of the banks that is the biggest problem. Its what they can do and how interconnected they are. As long as OTC derivatives are not regulated, breaking up the banks won’t mean a thing.
    LTCM was not a bank, just saying.

  20. 20
    Suffern ACE says:

    @schrodinger’s cat: Yes. The problem isn’t that a big bank failed in 2008. It was that they all decided to fail at the same time that was the problem. Oh, I’m sure Chase and Goldman would have survived that. They would have failed in the Spring.

  21. 21
    NotMax says:

    @Ted & Hellen

    The original bill which later became christened Dodd-Frank (and passed and signed into law) was proposed by Obama to the Congress 3 years ago.

    Not perfect, of course, but contained provisions to begin to address “too big to fail” in an orderly, albeit incremental, manner.

    Oh, that’s right he was too busy stuffing his admin with Wall Street and bank types.

    1) As opposed to which administration which did not?

    2) Dismal fact of life that those, most often, are the folks who can successfully get through the nomination process. More so in the Age of Filibuster.

  22. 22
    srv says:

    The enemy of my enemy is my friend.

    Whatever hurts Goldman Sachs is good for America.

  23. 23
    Baud says:

    @schrodinger’s cat:

    U.S. House lawmakers advanced legislation that would ease Dodd-Frank Act derivatives rules and give banks greater ability to trade swaps overseas.

    The House Agriculture Committee voted today to move seven measures, including one to allow trading of almost all types of derivatives by units of banks that hold government-insured deposits — such as JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) A separate bill would restrict U.S. regulators’ ability to apply rules to overseas transactions.

    The measures, which would need approval from the House and Senate before heading to President Barack Obama, are part of an effort to amend or limit the regulatory overhaul the president signed into law less than three years ago. Dodd-Frank requires the Commodity Futures Trading Commission and Securities and Exchange Commission to create swap-market rules after largely unregulated trades helped fuel the 2008 credit crisis.

  24. 24
    Ted & Hellen says:

    @aimai:

    And you seem to have missed the fact that Obama left her in the lurch regarding the chairmanship of the CPB, then refused to campaign for her in Massachusetts during her Senatorial campaign.

    Yes, but always TRIES to hard, but those darn republicans foil him at every move. Drat!

    I’m just hoping she avoids private aircraft now that she’s begun speaking up.

  25. 25
    schrodinger's cat says:

    @Suffern ACE: That’s because they were all investing in the worthless CDSs and CDOs which AIG was insuring.

  26. 26
    Thomas F says:

    As this is Zandar, I always look to see how he re-engineers the news to favor whatever disastrous aspect of the Obama Administration currently looks most vulnerable. Certainly even someone as dim-witted as himself should read enough to know what a travesty Dodd-Frank has been. What a sop to the financial industry that it was, has been, and continues to be. How it did positively nothing about TBTF and virtually ensures that the fall 2008 crisis will replay itself. That it illustrates how extensively the Administration is a creature of Wall Street, through and through.

    Zandar would know any of this if he read the work of MIT Economists Simon Johnson and James Kwak, both men of the Left who’ve identified what a failure this Administration has been on financial policy. He would know that breaking up the banks is precisely what is needed to avoid a repeat of 2008 and that further ad hoc regulation will do nothing.

    He would know all this if he wasn’t a servile tool of the President who’d happily call night day and black white if it benefited his Administration.

  27. 27
    bemused says:

    @Bubblegum Tate:

    Very weird. Big government, worst thing ever. Big corporation, AOK. Chumps.

  28. 28
    Ted & Hellen says:

    @NotMax:

    but contained provisions to begin to address “too big to fail” in an orderly, albeit incremental, manner.

    I wonder why such timidity in the face of the gravest financial crash since the Depression?

    As opposed to which administration which did not?

    Hope! Change! Inspiring.

    Dismal fact of life that those, most often, are the folks who can successfully get through the nomination process. More so in the Age of Filibuster.

    But more and better Dems! Also too, it’s just such a darn shame that Harry Reid and those fighting Dems just can’t do a darn thing about that filibuster. The Repubs are just so all fired MEAN.

  29. 29
    Ted & Hellen says:

    @Thomas F:

    He would know all this if he wasn’t a servile tool of the President who’d happily call night day and black white if it benefited his Administration.

    You, good sir, are a racist.

  30. 30
    ThatLeftTurnInABQ says:

    @NotMax:

    1) As opposed to which administration which did not?

    Certainly not FDR, who picked Joe Kennedy to run the SEC out of St Helen of the Blessed Shroud Orphanage, on the basis of his outstanding morals and purity of heart.

  31. 31
    David Koch says:

    Where is Elizabeth Warren on this matter? Her silence is deafening.

    it’s stunning to see her cede this issue to the likes of Diaper David Vitter

    What a disappoint she’s become.

  32. 32
    dp says:

    David Vitter is on board, so you can be sure that something nefarious is going on.

  33. 33
    Ben Franklin says:

    @Thomas F:

    Zandar probably took the same oath of loyalty as Sharpton.

    ‘see no evil……’

  34. 34
    Todd says:

    Worst troll thread EVAR.

  35. 35
    Davis X. Machina says:

    It’s atavism. There’s a strong anti-banker strain in freshwater populism, sometimes big-P populist, sometimes Democrat, sometimes goo-goo prairie Republican, that goes back to William Jennings Bryan and Frank Norris days. Huey Long used to rail against them — and take their money when it pleased him. When the bankers were all New York Joos, it was even easier.

    To the extent that the GOP is now essentially he old Dixiecrat arm of the mid-century Democratic coalition, I’m surprised we haven’t seen more of this.

  36. 36
    Davis X. Machina says:

    @Thomas F: I’m guessing property still isn’t theft, either.

  37. 37

    @The Moar You Know:

    I have to go along with this. It wasn’t that long ago that you could put your money in a local bank. We had, I don’t know, there must have been 8 or 10 around Philadelphia when I was growing up in the 70’s and 80’s. First Pennsylvania, Provident, P.S.F.S., those are the ones I can think of off the top of my head, and they all had main offices in Philadelphia. When we went up to the town my father grew up in near Harrisburg, there were even smaller banks. I recall seeing York Federal banks and the Farmer’s Bank of Hummelstown, which my great grandfather was a director of.

    I don’t guess any of those are left any longer, but I’m a big fan of small, locally owned, locally run banks. For one thing, if one goes under, it doesn’t threaten to take the world’s economy down with it. For another thing, I’ve always been a big believer in the adage, “You don’t shit where you eat.” One of the problems with these huge banks, I think, is that the people fucking around, taking needless, heedless risks, blowing through depositors’ money, these guys are so far from any of the people who end up getting screwed. Maybe if the guy who’s thinking about some shady deal lives on the same street as a lot of the people whose savings he’d be gambling with, well, maybe he wouldn’t gamble like that. I don’t know that that’s true, but it seems to hold water, and it’s hard for me to see how it could be any worse than what we have today.

  38. 38
    Chris says:

    @MattF:

    First, there’s traditional hostility between Red state businesses and New York (and worldwide) financial institutions

    This.

    Wasn’t the Gingrich revolution powered by turning away from the Eastern Establishment and tapping into smaller, but more conservative, regional businesses? I recall that being explained to me on this blog.

  39. 39
    Chris says:

    @Ben Franklin:

    It would be interesting if they came up with a Bull Moose type Party, which was started by Teddy who wanted to compete with the progressive WW.

    Huckabee strikes me as the national level politician least unlikely to do that. Alas for him, he’s already considered soft on crime and soft on immigration by the base, and the big banks would demagogue the shit out of him on that account, probably successfully.

  40. 40
    Chris says:

    @Davis X. Machina:

    I agree with this.

    Southern Democrats especially had a sweet gig going for about fifty or sixty years after Reconstruction where they’d run for office by railing against carpetbaggers, scallawags, and their exploitative Yankee bosses back in their East Coast mansions. Then they’d get elected, promptly sign a dozen contracts with said DamYankee carpetbaggers, and continue running with their money.

    (Long at least shoveled a good chunk of that money towards the public good).

  41. 41
    Chris says:

    @Zapruder F. Mashtots, D.D.S. (Mumphrey, et al.):

    Maybe if the guy who’s thinking about some shady deal lives on the same street as a lot of the people whose savings he’d be gambling with, well, maybe he wouldn’t gamble like that. I don’t know that that’s true

    I think it’s possible, but a pretty optimistic take on things. Didn’t this country used to be riddled with company towns owned by one guy or family? Was the relationship ever anything other than, basically, the modern version of the nobleman in his castle? The smallest and pettiest tyrants are often the worst ones.

  42. 42
    Chris says:

    @MattF:

    Addendum to what I wrote before.

    Who do the big banks, and specifically the Big Apple based nexus, support within the Republican Party? Have they, in fact, hopped on board the Karl Rove train that says the party needs to stop flinging its own shit in public so that it can win elections?

    Because if so, that’s probably the entire explanation right there. Teabaggers see the big banks betraying True Conservatism, and would like to use the most convenient tool around (the government) to smack them down in retaliation. Sounds eminently logical to me.

  43. 43
    fuckwit says:

    Nope. I can see exactly what this is.

    It’s a classic “divide and conquer” strategy, combined with the reflexive Rethug tendency to go for immediate mirror-image revenge against anyone using a tactic successfully against them. Their first instinct is to throw it right back.

    The Rethugs are in the middle of a civil war, over immigration, etc. They want to create discord in the Democratic party too. They’re searching for an issue to do it with.

    So this is how they think they are going do it. This is the new Firebagger thing, the new PUMA. They are going full Greenwald/Firebagger.

    They noticed with the Rand Paul Twitter Drone Skirmish that they can peel off a bunch of progressives, and even create some minor discord among Democrats, with issues like Drones, Guantanamo, etc. And they went, OOH OOH SHINY!

    So they’re now going to try it by going after banks. They’re going to try to out-Elizabeth-Warren Elizabeth Warren. Risky, perhaps, because the Rethug power structure is almost by definition the tool of Wall Street. But they have played with fire before, as with the Teabaggers, and even though that backfired on them, they can’t resist an opportunity to attack. So they’re attacking. Great twofer, too, since the Teabaggers are all about it as well, so they win over both Teabaggers and perhaps a good number of progressives.

    So. this is the new Thing they’re going to try.

    The danger, of course, is that this will backfire on them. They’ll be stuck with yet another civil war inside their own party, not only of racists vs corporations, and racists vs. Rovian realpoliticians, and libertarians vs. military-industrial-complex-neocons, but now anti-bank-populists vs. corporations and Wall Street-backed career pols.

    Popcorn.

  44. 44
    serena1313 says:

    Salon’s article about the House Agriculture Committee gutting financial regulations is well worth the read:

    http://www.salon.com/2013/03/2....._a_farmer/

  45. 45
    MCA1 says:

    @schrodinger’s cat: This. Get the Glass-Steagall Band back together, and I’ll feel a lot better than I will if we split JPM and BofA and Wells into a dozen smaller institutions who are still running derivatives and hedging activities that dwarf the actual circulation in their commercial and consumer banking operations. Lehman and Bear Stearns going down isn’t the same thing if we don’t have to worry about them taking down everybody’s depository savings institutions with them.

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