海角大神

The recent kerfluffle about Bernie Sanders purportedly not knowing how to bust up the big banks says far more about the threat Sanders poses to the Democratic establishment and its Wall Street wing than it does about the candidate himself.

Of course Sanders knows how to bust up the big banks. He鈥檚 already introduced legislation to do just that. And even without new legislation a president has the power under the Dodd-Frank reform act to initiate such a breakup.

But Sanders threatens the Democratic establishment and Wall Street, not least because he鈥檚 intent on doing exactly what he says he鈥檒l do:聽breaking up the biggest banks.

The biggest are far larger today than they were in 2008 when they were deemed 鈥渢oo big to fail.鈥� Then, the five largest held around 30 percent of all U.S. banking assets. Today they have 44 percent.

According to a recent analysis by Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation,聽the assets of just four giant banks 鈥� JPMorgan Chase, Citibank, Bank of America, and Wells Fargo 鈥� amount to 97 percent of our the nation鈥檚 entire gross domestic product in 2012.

Which means they鈥檙e now way too big to fail. The danger to the economy isn鈥檛 just their indebtedness. It鈥檚 their dominance over the entire financial and economic system.

Bernie Sanders isn鈥檛 the only one urging the big banks be broken up. Neel Kashkari, the new president of the Federal Reserve bank of Minneapolis 鈥� a Republican who used to be at Goldman Sachs 鈥� is also pushing to break them up, as has the former head of the Dallas Federal Reserve, among others.

Recall that just eight years ago the biggest banks were up to their ears in fraudulent practices 鈥� lending money to mortgage originators to make risky home loans laced with false claims, buying back those loans and repackaging them for investors without revealing their risks, and then participating in a wave of fraudulent foreclosures. 聽

Dodd-Frank addressed these sorts of abuses in broad strokes but left the most important decisions to regulatory agencies.

Since then, platoons of Wall Street lobbyists, lawyers and litigators have been watering down and delaying those regulations.

For example, Dodd-Frank instructed the Commodity Futures Trading Commission to reduce certain risks, but the Street has sabotaged the process.

In its first major rule under Dodd-Frank, the CFTC considered 1,500 comments, largely generated by and from the Street. After several years the commission issued a proposed rule, including some of the loopholes and exceptions the Street sought.

Wall Street still wasn鈥檛 satisfied. So the CFTC agreed to delay enforcement of the rule, allowing the Street more time to voice its objections. Even this wasn鈥檛 enough for the big banks, whose lawyers then filed a lawsuit in the federal courts, arguing that the commission鈥檚 cost-benefit analysis wasn鈥檛 adequate.

As of now, only 155 of the 398 regulations required by Dodd-Frank have been finalized. And those final versions are shot through with loopholes big enough for Wall Street鈥檚 top brass to drive their Ferrari鈥檚 through.

The biggest banks still haven鈥檛 even come up with acceptable 鈥渓iving wills,鈥� required under Dodd-Frank to show how they鈥檇 maintain important functions while going through bankruptcy.

Meanwhile they continue to gamble with depositor鈥檚 money. Many of their operations are global, making it even harder for U.S. regulators to rein them in 鈥� as evidenced by JPMorgan Chase鈥檚 $6.2 billion loss in its 鈥淟ondon Whale鈥� operation in 2012. Citigroup alone has over 2,000 foreign subsidies.

The bottom line: Regulation won鈥檛 end the Street鈥檚 abuses. The Street has too much firepower. And because it continues to be a major source of campaign funding, no set of regulations will be tough enough. 聽

So the biggest banks must be busted up.

When I debated former Rep. Barney Frank about this on television recently, he kept asking, rhetorically, what limit I鈥檇 put on their size.

A good rule of thumb might be to cap the assets of any bank at about 2 percent of the nation鈥檚 Gross Domestic Product 鈥� or roughly $330 billion. (To put this in perspective, by the end of 2015, Goldman Sachs鈥檚 assets exceeded $860 billion.)

That cap wouldn鈥檛 harm America鈥檚 financial competitiveness and it wouldn鈥檛 cause bank employees to lose their jobs (at worst, they鈥檒l just become employees of a smaller bank).

But it would ensure the safety of the American economy. Extra bonus: It would also reduce the power of Wall Street over our democracy. 聽

This article first appeared in Robert Reich.