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Bernie Sanders introduces bill to break up big banks

Bernie Sanders introduces bill to break up big banks
© Greg Nash

Sen. Bernie SandersBernard (Bernie) SandersSchumer’s headaches to multiply in next Congress Sarah Silverman: I'm 'very lucky' I don't have to wear a Jewish star in Trump era US to stop refueling Saudi planes in Yemen MORE (I-Vt.) introduced a bill Wednesday that would break up some of the largest U.S. banks, a long-standing goal of financial sector skeptics.

The bill would force the federal government to dismantle any bank with total exposure greater than 3 percent of U.S. GDP, which is roughly equal to $584 billion. Banks above that threshold would be given two years to downsize before the federal government would be forced to take them apart.

Sanders introduced his bill on the 10th anniversary of the enactment of the Troubled Asset Relief Program (TARP), which injected $424 billion into sputtering banks to stave off a global financial meltdown.

“No financial institution should be so large that its failure would cause catastrophic risk to millions of Americans or to our nation’s economic well being,” said Sanders, a rumored 2020 presidential hopeful.

“We must end, once and for all, the scheme that is nothing more than a free insurance policy for Wall Street: the policy of ‘too big to fail.’”

Sanders’ bill would apply to six U.S. banks: JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, Bank of America and Morgan Stanley. Each of those firms received billions of dollars in federal bailout money issued after the 2008 financial crisis and have exploded in size and value since.

Sanders has long called for breaking up the largest U.S. financial institutions and rode a wave of liberal anger at Wall Street to prominence during the 2016 Democratic primary. Potential challengers to President TrumpDonald John TrumpMichael Cohen: I pray Michelle Obama's words will unite country again Michelle Obama: ‘I stopped even trying to smile’ during Trump’s inauguration Trump wants to end federal relief money for Puerto Rico: report MORE have sought to harness that energy and bolster their progressive credentials ahead of 2020 campaign season.

Big banks have also brushed off calls for their dismantlement, arguing that their size and scale is essential to supporting a $20-trillion U.S. economy.

“The banking industry and governments around the globe have made enormous strides during the past decade to ensure that large banks are safe and sound and that no institution is too big to fail,” said Financial Services Forum president and CEO Kevin Fromer. His trade group represents the eight largest U.S. banks, including the six targeted by Sanders’ bill.

“Policymakers must neither ignore the progress that has been made nor the essential role of large financial institutions in our economy.”