A conservative case for breaking up the banks

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James Pethokoukis notes that while he may not agree with Occupy Wall Street and politicians that criticize bankers, he still believes that “America doesn’t need 20 banks with combined assets equal to nearly 90 percent of the U.S. economy, or five mega-banks​—​JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs​—​with combined assets equal to almost 60 percent of national output, three times what they were in the 1990s.”

“Of course, some will argue that we need large, complex financial institutions and that their very existence is proof of that. Who are the know-it-all breaker-uppers to say we don’t? But that size and complexity is itself more a result of crony capitalism than of market forces. It’s little wonder, then, that the preponderance of the evidence is that all the supposed benefits from supersized banks and their economies of scale are outweighed by the risks of disaster they generate… Breaking up the biggest banks would allow markets to work better, by cutting down on crony capitalist rent-seeking by big money from big government. It would also reduce the moral hazard created by Washington’s too big to fail policy. Ending too big to fail isn’t a policy conservatives should shy away from​—​even if some on the left support it too.”

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.