Kentucky's Stake in “Too Big to Fail”
Tuesday, June 18, 2013
BEREA, Ky. - Saying Wall Street banks still have too much influence over the economy, Ohio's Democratic U.S. Senator Sherrod Brown is continuing his uphill battle to end "too big to fail." Brown is co-sponsor of legislation aimed at ending the advantage the six biggest U.S. banks have over the little guys.
Brown, who has been working on this issue for quite some time, said support is building, even among conservatives.
"These Wall Street banks, who really created much of the economic almost-collapse of 2007 and 2008, paid little price for what they did," the Senator declared. "And we should no longer protect these banks and their executives from the market or from the rule of laws."
Brown said the "too big to fail" guarantee has allowed these large banks to lend basically risk-free and at lower rates than regional and community banks.
According to Jason Bailey, executive director of the Kentucky Center for Economic Policy, the wrecking of the economy five years ago is why people in the Bluegrass State should care about the legislation.
"That had huge implications for the quality of life in Kentucky, for the unemployment rate, for our ability to raise revenue we need for investments in our schools and our health and our roads and everything else," Bailey stated. "So, what happens on Wall Street affects what happens in Main Street in Kentucky."
The large banks claim their size makes them more efficient, allowing for more lending. But Senator Brown said there's more evidence that mega-banks put the economy in jeopardy because of their size and because they take far more risks.
He said the six banks have actually grown since the financial crisis, a circumstance which can, again, threaten the financial stability of our economy.
"These banks, if they're smaller they can be more efficient, they will likely hire more people in the aggregate, and the problem is they aren't lending what they should and they're holding back on lending in many cases," Brown charged.
While critics contend the legislation would put the larger banks at an international competitive disadvantage, Brown said American banks are the largest in the world and multinational corporations typically spread out their risk, borrowing from multiple banks, not just one institution.
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