Twenty percent of America’s net worth was destroyed in the 2008 financial meltdown. And two progressive champions, Reps. Alan Grayson and John Conyers, are taking on the problem of “Too Big to Fail” banks to make sure it never happens again.
The “Too Big to Fail” banks, the biggest banks in the country, are able to make immensely dangerous and deeply irresponsible bets in the Wall Street casino knowing that taxpayers (fearing that a bank failure will send the economy into a death spiral) will bail out the banks no matter what.
In essence, they’re gambling with our money. The top banking executives whose bonuses depend on high returns have every incentive to make the biggest, riskiest bets they can because they’ll get rich if the bets pay off. And if not, they can stick taxpayers with the bill.
Reps. Grayson and Conyers want to put a stop to this, and have asked for your help reining in “Too Big to Fail” banks.
Co-sign a public comment from join Reps. Alan Grayson and John Conyers and tell federal banking regulators to make sure the big banks can’t gamble with taxpayer money.
Federal banking regulators have recently proposed a rule that would make it harder for banks to take on more risk than they can bear.
The proposed rule would require the eight largest banks, the ones deemed to be “Too Big to Fail” (in official jargon, the banks deemed to be “Systemically Important Financial Institutions”), to keep a combined $89 billion on hand to cover unforeseen losses.
This money would help ensure that “Too Big to Fail” banks that make bad investments can cover their losses without going broke, which insulates taxpayers from the fallout when banks wind up on the wrong side of their risky bets.
Not only would the proposed rule require the banks to hold onto more money, it would also require the banks to hold onto higher amounts of capital before they can give out executive bonuses.
By forcing banks to eat their losses and tying executive bonuses to their ability to do so, the proposed rule provides a serious disincentive for excessively risky behavior.
Unsurprisingly, the banks are screaming bloody murder and trying to weaken the standard.
But Reps. Grayson and Conyers are asking the banking regulators to not only stand strong, but to vastly increase the amount the banks need to hold onto.
Put simply, we need much more than an $89 billion buffer between us and another devastating bailout.
In addition to asking for higher standards, Reps. Grayson and Conyers have asked federal banking regulators for simpler standards that are less prone to manipulation by bankers and less subject to the whims of future regulators.
They have written a long letter to regulators, which you can read here. But it boils down to a statement they have asked CREDO members to co-sign. Namely:
“Big banks shouldn't gamble with our money. Twenty percent of America's net worth was destroyed in the 2008 financial meltdown -- that should never happen again. I am co-signing the Grayson-Conyers letter to make sure big banks stop gambling with my money."
Co-sign this statement and Rep. Grayson will submit your signature as a public comment along with the Grayson-Conyers letter.