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.